According to a report from the Federal Reserve to include a merchant cash advance, 76% of applicants for cash advances, loans, and lines of credit in 2020 were approved.
A short-term funder offers a merchant cash advance, or MCA, in the form of a finance solution for companies. These companies are looking for financing that carries numerous benefits, which include:
- Working capital to maintain inventory
- Cash to cover operating expenses
- Funds for equipment for your business’ regular function (sinks, dryers, curling irons, etc.)
- Money that is available even with lower odds of approval on a traditional loan
- Address short term cash flow interruptions with a merchant cash advance
Business owners know the challenges of building connections and growing their companies. Driving meaningful product experiences leaves customers satisfied.
Let’s look at how a merchant cash advance can help your company take the business to the next level.
How Merchant Cash Advances Work
Providers for merchant cash advances (MCAs) must qualify you for funding. As a result, they will weigh risk and different criteria for credit. This process differs from what you receive from a banker.
Funders will examine business bank statements and even daily credit card receipts to consider your advance. For this reason, businesses that have historically strong credit card sales will favor this sort of cash advance.
Reviewing your credit card receipts allows a merchant cash advance provider to determine if your business can repay the funds responsibly.
You, the business owner, and the MCA provider will agree on an amount, cost, and term. What your business does, in effect, is to “sell” a portion of future sales in exchange for immediate payment.
MCAs for the most part are driven by a business’s future receivables, on the basis of previous sales history. As a result, a funder will require from three to twelve months of bank statements to qualify you for an advance.
Past capital management will also be assessed to look more closely at risk. If a business owner has defaulted on a past loan or declared bankruptcy, this will be taken into consideration.
Upon approval, funds will go directly into your bank account. As a result, it is crucial that an MCA recipient has a clear picture of the repayments. Responsible management of an MCA is best for your business and will help avoid penalties.
Considerations before Accepting an MCA
As a business owner, you will want to look closely at the conditions that come with any funding. For example, reviewing the rates on merchant cash advances can help you consider if they are a fit.
Considering your business’s financing options is essential. When reviewing an MCA as an option, ensure that the amount you’re looking for is enough. Additionally, the funding should not exceed the business’s monthly income in order to avoid overleveraging the company.
Comparisons to other financing options can paint a complete picture of your ideal funding source. In addition, acting as a capable recipient can improve your experience with any financing.
It’s essential to understand how your cash advance works since not all funding is precisely alike. Consequently, understanding the terms of your merchant cash advance offer will help you make the most of your decision.
Qualifying for a Merchant Cash Advance
Lenders will need to look back at a minimum of three months of your business’ bank and merchant account statements. The provider will want to see consistent deposits. Additionally, the provider will want to see that there are minimum amounts of chargebacks on the merchant statements.
Business bank accounts with positive ending daily balances are a solid indicator of a business’s ability to handle capital responsibly.
Additionally, while some lenders will verify the existence of your business for a minimum of six months, there are exceptions to this rule. For more information, our staff of corporate professionals would be happy to discuss your unique circumstances.
Repayment of your Merchant Cash Advance
Arrangements for repayment can include fixed daily withdrawals from a bank account. Alternately, your repayment option can be weekly, or even monthly from your bank account.
Some loan programs available also make use of a percentage of daily credit card receipts to repay your merchant cash advance. This amount is known as a holdback. You will be responsible for repayment based on conditions outlined at the start of the process.
We provide affordable repayment options. For example, there are even simple fixed-cost options without having to put up collateral. Since our repayment options are tailored to fit your business needs, you can secure funding fast and manage capital effectively.
Having no restrictions on the use of these funds while you address your business expenses provides a level of freedom.
Exercise these options responsibly, and avoid being in a default position for missing payments. It’s always best to stay on top of repayments to avoid penalties.
Have Confidence in your Inventory with a Merchant Cash Advance
With the funding from a merchant cash advance, you can quickly get a financing solution. Even without a strong credit profile, you can have cash on hand for the inventory your customers need. Fewer disruptions for products mean a more streamlined experience for your clients.
Something like an equipment loan may tie back to a use case. This condition is not a part of merchant cash advances. You can respond quickly to a business opportunity to have more supplies on hand.
Reducing the impact of inventory disruptions is possible by having the necessary capital available. Having enough on hand means fewer spontaneous purchases at higher price points.
Having inventory that your business can turn around quickly is a tremendous value. Keep your inventory replenished. Improve cash flow and have your store shelves stocked and ready. Happy customers are repeat customers.
Funding Your Operations Costs with a Merchant Cash Advance
Your business certainly has the upkeep and replacement of equipment to consider. This can list can be extensive. However, your customers look to you to have the right tools for the job, so you can’t cut corners.
Also, consider the licensing, permits, and certifications that may go into your business. Insurance, utilities, and even more expenses also add up.
Additionally, as a business that serves many people, you will need better appointment scheduling tools to save time. Funding for these platforms can snowball, so having cash available is crucial. Your presence in the latest booking platform can help your business grow.
Social media is the next level of marketing, and your ads or influencer budget may need support. Building your brand into an expanding conversation is crucial. Consider how a merchant cash advance can help you service and generate new customers.
Keep the Momentum while growing Your Business’ Digital Footprint
Social media conversations are some of the most important for business today. But, don’t let cash flow slow the digital resources you need. Businesses require their customers to see their incredible work. Continuing that reach is an investment.
Your digital services that bring the best graphics and imagery can be costly. A merchant cash advance can help keep the funding in place. It is conversational commerce that drives more growth.
Word of mouth begins by making your target customers aware of your presence. Also, business owners must get rid of hurdles that slow down the booking process. Booking platforms today are another investment to consider.
Making the voice of your brand number one means expansion into new avenues. A merchant cash advance can help secure the capital you need to do just that.
Expand the Retail Experience with a Merchant Cash Advance
There are constant changes in the marketplace. In the era of Covid-19, businesses face new challenges to foot traffic. However, overhead costs are still due, and business owners need to rise to the occasion.
With these changes, business owners are taking some direct approaches to the customer experience. Via mail or in-person, there are opportunities to give your clients more of what they want.
Keeping your business relationship alive means expansion and creating a footprint in the retail experience, even outside operating hours. Having the financing on hand to continue this growth makes all the difference. A merchant cash advance can be a part of that effort.
Your customers will know you haven’t forgotten them even when they’re not in person.
Businesses require speedy funding solutions. A merchant cash advance may be a viable option when a traditional loan is difficult. In addition, competitive repayment terms are available in some cases.
Shop around for options that fit your budget and can help grow your business. Take a moment to find out if a merchant cash advance is the best financing to support your business. There are fast cash options on the market.
A merchant cash advance may fit you or your team to provide upfront cash quickly.
The Merchant Funding Solutions team is ready to answer your questions about this terrific opportunity for quick access to funds. Choose how to spend your merchant cash advance and do it with no collateral requirements.