Many small businesses whether startups or those that have been around for a while finding it difficult to secure credit from banks. If they secure, The money they get in most cases is not much and the conditions the banks provide can be deterring. Merchant cash advance is viewed by many people as a solution of its kind to small businesses especially those businesses that get payment via credit card.
For those not so conversant with merchant cash advance, its system that allows businesses that are paid through credit cards and have a merchant account to get some cash advance based on the projected future credit card payments. This means that if you have a business that receives credit card payments, you are eligible to get cash advance from merchant cash advance provider. Merchant cash advance offers the following compared to other sources of cash advances;
The period it takes to get approved for a cash advance from merchant cash advance provider is just one to two hours and in the rare situation up to two days. More established MCA providers will just take a few hours. The application process is simple. You apply for the advance by filling a one or two pages document accompanied by identification details like social security number, business tax registration number, business registration certificate and any other document as may be provided by a specific MCA provider. You will also attach a copy of credit card statement as well as a copy of bank statement for several months up to six months. Once you send the application, you will get a response within a few hours of the approval.
The approval from MCA providers is so high since they don’t consult credit reference companies. They also don’t go outside the information provider. Once they see there is consistent credit card payment and that the payments are processed to your bank account and the money you want can be covered by the credit card sales, then they are ready to give you money. This is so much different from traditional banking where they seek to find your credit history, credit worthiness rating and so on.
There are times in the business when an opportunity may present itself and you want to take advantage. For example, when a festive season is looming and you are certain, during that period people will spend a lot in the shopping, you may need some urgent cash to spend on advertising or branding to get more sales. This may prompt you to look for some advance cash. When you compare Merchant cash advance providers with banks or other leading institutions like microfinance organization, merchant cash advance providers are the fastest in giving money. Most financial institutions will keep you waiting for a few days but with MCA providers, you will just wait for a few hours and the money will be in your account.
Merchant cash advance providers only require that they hold back a percentage of daily credit card payments. If you borrow $20,000 from a merchant cash advance provider. You agreed on the payback of $26000 and a holdback of 20%, it means the daily credit payments you receive, 20% will be retained to pay the $26000 until it’s finished. The rest will be paid to you and so you will go on with your activities as was before.
Merchant cash advance gives you some peace of mind as the repayment is based on a percentage of the daily sales and the cash provider is able to see the daily sales. The more the daily credit card payment, the faster the cash advanced will be repaid. You don’t interact with the portion of the daily cash that goes to repaying the amount.
Merchant cash advance moves your payment to new credit card processor. Then they deduct the percentage of holdback daily without your effort. This gives you the peace of mind and atmosphere to go on with work without pressure.
When you get money from merchant cash advance provider, you will not be subjected to restrictions of any kind. The only restriction is to change the credit card processor to the cash provider to facilitate deducting holdback percentage. Traditional financial institutions will require that you take all the money to the account you have with them plus other restrictions. There is much freedom with MCA providers than you will find with any other financial institutions.
MCA providers don’t look at whether you are listed with any credit reference bureau or your credit worthiness score. This means that even institutions whose credit rating is not good can access funds from MCA provider. This is such a breakthrough because once an institution credit rating has gone down; it takes a lot of effort, activities and time to improve the rating to an acceptable level by banking and other financial institutions.
Clearly, there are more benefits that your business will get from getting cash advances from MCA provider than you would from other financial institutions. The only challenge is whether you have enough transactions daily that can make you qualify for such funds.
Are you having a business that you will need some cash advances or you are a MCA provider who is looking for MCA leads?