5 Merchant Cash Advance Advantages for Online Business Owners

When you’re an online business, you have unique concerns and costs. However, you also face a lot of benefits that other businesses with a brick-and-mortar location don’t. Without the operational costs associated with having a physical location, you have extra resources to focus on improving your product, lead generations, and sales. To get your business to the next level, you may need an influx of cash that you can use to grow your current infrastructure, expand operations, or make new investments.

A merchant cash advance, or MCA, can help you do just that and can have more advantages than other business financing options. Here are the possible benefits your small online business could receive by getting an MCA.

Number 1: No Collateral (No Asset Backing or Effect on Credit)

A merchant cash advance is not a loan like you would get from a traditional bank. What you’re doing when you get an MCA is selling a portion of your future sales to the financier. They will give you a lump sum for that future credit card-based revenue. That means that getting approved for this advance relies on your credit card sales and sales history, not on the upfront collateral you provide.

Number 2: You Don’t Need Perfect Credit

Compared to traditional lending methods, the likelihood that your application to an MCA will get approved is higher than in other places, including credit cards. What makes MCAs even more convenient is that the application can be completed entirely online, and the process can be very quick if you have all the necessary paperwork on hand. Because good credit is not a requirement for approval, there is frequently no credit check done for this type of loan, making it ideal for those with bad credit.

What is vital for approval, however, is evidence that your business consistently makes sales with credit cards, which is the receivable the company will be getting a return on investment from. In many instances, MCA have almost guaranteed approval, making this perfect for those that need emergency cash.

Number 3: Receive Funding Fast

In a fast-paced market or in the face of special offers, you need a cash injection to take advantage of; you can use a merchant cash advance to get the money you need quickly. Depending on the scope of your application, the accuracy of your information, the company you work with, and the strength of your sales, you could receive funding instantly. In other cases, the application approval and funds transfer process usually does not take more than a week.

Number 4: Use the Funds However You See Fit

To reiterate, getting a MCA isn’t the same as getting a small business loan. Those loans often come with strict rules outlining how the capital you receive can be used. These rules include not being able to spend it on inventory, real estate, or covering other debts. With a merchant cash advance, you can use the funds for whatever your businesses needs currently are, like renovations, expanding operations and more.
Number 5: Flexible Payments

One of the major benefits of a merchant cash advance is that the payments are not fixed monthly or weekly payment terms. This can be great for online businesses as you will be remitting the investment, not paying back a loan based on an agreed percentage of credit card sales profits. If you have a slow month, you pay less and vice versa.

Get the Capital You Need Fast

The online world moves at a breakneck pace; you need a business loan that can get to you just as fast. An MCA can offer you the capital you need right in just a few minutes in some cases. Consider carefully how your business may use this cash injection to increase profits and grow your business.

Obtaining a Merchant Cash Advance: Learning the Process

In an ever-changing economic environment that has left many small businesses behind, understanding the financing options available is vital. A merchant cash advance (MCA) can give a small business an injection of cash necessary to boost your business to the next level. If you’ve been curious about getting a capital infusion from an MCA, you may be wondering how you can apply for one.

The process is simpler than you might think.

What Do You Need to Be Approved?

First, you have to understand how a merchant cash advance works. An MCA is a type of business loan that offers a business a lump sum of cash. This investment can be paid back to the lender based on future profits your business makes through credit card payments. A major part of getting approved for an MCA is through proving that your business has consistent credit card sales. Usually, this means that your business must take credit cards.
An MCA is very flexible and a fast financing option. Loans can vary from $5,000 to $500,000 at some companies, and you can use the capital in the way your business needs to, and payments are also very accommodating. Plus, the application process is very quick and requires few documents and depending on the lending company, no credit check.

This leads us to:

How To Apply

Applying for a merchant cash advance is incredibly straightforward.

1- Gather the Information You Need

First, you need to get your hands on all the information you’ll need to submit alongside an application. This will include a form of valid identification, like a government-issued ID or passport. Then a few months of bank statements and a bank account and routing number will be necessary to make the deposit.

Some companies may require a credit check on the business or business owner or ask for other documentation like previous credit card processing statements. Look to the lender’s website to see what pieces of information they need from you.

2- Apply Online

Next, you have to apply for the loan online. Have those documents you gathered on hand during this process and follow the instructions. Nearly all MCA applications can be filled out solely online and take a handful of minutes to complete.

3- Application Review Process

After your application is submitted, an algorithm and/or the human members of the team at the lender’s office will review the application. If more information is needed to decide the outcome of your application, you may be contacted during this phase.

4- Receive The Funds

Finally, if your application is approved, you’ll get the funding you’ve asked for. Depending on the accuracy of your information and other factors, this process could take anywhere from a few minutes to about a week. In some instances, you could receive the funding for your business almost instantly.

Making the Most of Your Cash Advance

When it comes to getting the funding your small business needs fast, a good option can be an MCA. This kind of loan is extremely flexible and can offer you the cash injection you need while offering a fast but adaptable payment schedule that works on percentages rather than fixed dates.

Pros and Cons to a Merchant Cash Advance

If you’re running a small business and you need a boost of capital, you may be looking for alternative lending options. As traditional banks become stricter with how they lend, many small businesses have turned to private lending for the financing they need.

Like with all things in life, MCAs have advantages and disadvantages that should be considered before you commit to using this business loan.

Understanding the Benefits of MCAs

There are many benefits from financing through an MCA. First of all, getting an infusion of cash can happen very quickly. In many cases, merchant cash advances require no credit approval and can come in in less than a week or even in a few minutes. This makes it great when you need to take quick advantage of a sale, when you are moving in on a deal quickly and suddenly require funds or if your business needs an emergency loan.

You do not need to have outstanding credit to qualify for an MCA. Those who have limited credit history can still possibly meet a lender’s requirements. On top of that, it’s also easy to get this business loan. Amongst other specifically outlined pieces of information that will be unique to a lender, all you need is to submit an application, a photo of your government-issued ID, and a few months of bank statements that reflect the state of your business.

To round out the benefits of getting a cash infusion through a merchant cash advance, you don’t need to put any collateral up when seeking this loan. Meaning there is no upfront collateral required to get funded. Instead, a MCA lender is looking for is evidence of strong sales numbers and to see if your future sales numbers will be steady as well.

Considering the Cons

One reason why an MCA may not be right for your business is also one of its benefits. These cash infusions are short-term. You may have anywhere from 3 to 15 months to pay off your balance. Coupled with a high-interest rate (ranging from 9% to 50%), if you’re not certain this cash infusion will boost sales and generate enough profit to cover the loan balance, then it may not be a suitable lending option for you.

This leads to another potential issue. Financing, in this case, is based on future sales, which can be a problem if sales don’t reach projected levels. While this risk is a factor in all kinds of loans, it is increased by the short repayment period and the high cost of an MCA.

Finding the Best Financing for You

Consider these pros and cons carefully, and always review the terms and conditions of any lending agreements you receive. A merchant cash advance can be a great financing option for your business under the right circumstances. If you get a high influx of your payments through credit cards, then this option is primed for you to take advantage of. However, in other cases, it may be best to look for different lending options if you need a cash infusion.