BusinessCash is funding during the COVID-19 crisis.

If you’ve been in the market for a loan or have gotten tired of bootstrapping your small business, there is another available option. It’s not yet well-known, but under the right circumstances is a viable route that’s worth taking a minute to understand.

Here are the answers to small business owners’ most common questions regarding merchant cash advances.

what can a merchant cash advance do for you

What can a Merchant Cash Advance do for you?

What is a merchant cash advance and which businesses might most greatly benefit:

If you have a stable and robust business, but still can’t get access to capital

A merchant cash advance, through the factoring of future sales, is a quick and flexible financing option. This can provide your business with needed capital in days, not months like traditional lenders. However, a cash advance is only appropriate for companies that have a stable business outlook. Businesses in decline, looking to restructure existing debt (except when consolidating high-cost debt), or resolve other structural issues are not good candidates for a merchant cash advance. counsels these merchants regarding options for more appropriate sources of financing.

If your business has significant credit card sales

The continuity and predictability of your credit card sales is a business asset that can be used to gain access to capital. For example, we purchase a business’ future credit card transactions and advances that money to the market. After receiving the advance, we deduct a small, fixed percentage of the daily credit card sales until the payment advance is in full. The company keeps 100% of their cash and checks sales.

If you are a highly seasonal business

Seasonal businesses need cash on a seasonal basis and require flexible repayment schedules to match their business activity. Unlike a loan, the repayment schedule of a future sales factoring contract is tied to the amount of the merchant’s future sales. This allows a merchant with seasonal sales to gain access to much larger amounts of capital and decreases the merchant’s risk of default of having to repay a high fixed amount per month during their slow season.

If you don’t have significant personal or business assets

Banks and other traditional lenders usually require physical assets. A cash advance based on a factoring contract usually only requires a security interest in your future sales.

If you have not been in business for more than five years

While most banks and other lenders require 3-5 years minimum business experience, most merchant cash advance companies will provide financing after just the first year. To qualify, you need only to have been in business for one year and not in bankruptcy within the past six months. Also, you need to be able to process at least $5,000 in credit card sales each month for the last four months. We even have a starter program that only requires six months of business history and that the merchant is not currently in bankruptcy.

The bank won’t lend you business money due to your credit

Banks reject 50 percent of small business loan applications typically based on the owner’s credit. They reply on the credit quality of the owner (the guarantor) and the value of collateral to support the credit decision. Banks can overlook and ignore good businesses. This is usually because they don’t look at the overall health of the company based on its sales. We focus on credit investigations on the health and prospects of the business first. After this, we consider the quality of the guarantor, the collateral.

If you need cash quickly

For example, you get hundreds of unexpected orders and need to buy more inventory or supplies or need to work on renovations. Merchant cash advance companies can fund in 5 to 10 days. A bank will typically take more than one month to complete a loan.

Funding options are opening up and should continue to get better as the economy improves. Merchant cash advances are becoming more mainstream, and now you know why.

Have questions about our Merchant Cash Advance Program? Call (888) 400-5930 or use the fast, safe & secure online funding application.

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