Is a Merchant Cash Advance Right for Your Small Business?

When it comes to financing your small business, you have a ton of different options from which to choose. There’s traditional bank lending and alternative financing, which is comprised of opportunities such as crowdfunding, grants, angel investing and a merchant cash advance. Your circumstance will dictate which type of funding is best for you, as each of these options is unique unto itself.

What Is a Merchant Cash Advance?

An MCA, as they’re commonly called, is direct cash borrowed against your small business’ future sales; specifically your debit and credit card transactions. This type of loan works well for those needing instant cash without a ton of hassle. They also work well if you accurately anticipate your future profits, as this will be the money you use to pay back the loan.

Does an MCA Work Well for Small Businesses?

Yes and the reason is simple: Small business owners might not be established financially, making getting a big-bank loan impossible. This type of lender is more concerned about your projected profits than credit worthiness, so even a business owner who’s just starting out and has little or no established credit can obtain an MCA for his or her financial needs.

Can I Use an MCA for My Start-up Costs?

You can use an MCA for anything. Unlike traditional bank loans, the lender issuing your merchant cash advance will not stipulate how it is to be spent. If you need a quick loan to help get your business off the ground, or if you are looking for a way to cover your next payroll, you can secure an MCA for these needs.

What Are Some Good Reason to Take Out an MCA?

Alongside cash to cover your business’ start-up or operating costs, an MCA gives you extra financing to expand your business during busy times. It can also give you cash to begin manufacturing your next product, or to open a new store on the other side of town. The uses are only limited to your imagination.

How Long Do I Have to Pay Back an MCA?

The terms of your loan will depend upon the lender and your future sales, but the latter is what makes this such a viable financing opportunity for small businesses. Typically, your payment plan will follow your business’ monthly profits, as the lender will take a percentage of your debit and credit cards sales to pay back the MCA. This is perhaps the best benefit of a merchant cash advance for a small business: payment flexibility designed to make, not break, the bank.


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