Merchant Cash Advance
Not to be mistaken for a Loan, a MCA or Business
Advance can we an alternative funding instrument.
A Merchant Cash Advance (MCA) is a type of funding where a Funding Company (Funder) provides a lump- sum of cash to a business in exchange for a percentage of the business's future sales.
Essentially, the Funder is purchasing a portion of the business's future revenue. The amount of funding available through an MCA is typically based on the business's bank deposits and/or credit card sales volume.
The payments are made automatically via ACH payments or from the merchant credit card processor until the MCA is fully repaid, which typically takes several months.
A Merchant Cash Advance can be a saving grace when needing capital fast. Usually funding is available within one week or less and requires less documentation but carries a higher risk. With higher risk you get higher rates and shorter terms.
Find the Best Merchant Cash Advance
Not all Merchant Cash Advance Companies are the same. Each are in a different Tier based on State, Industry, Credit Score, Time in Business, and Operational Type. This is hard to know by searching websites alone.
The Confident Broker is here to help you qualify and apply.
The Pros and Cons of Advance Stacking
Taking on multiple loans or debt advances can be risky for your business for several reasons. Our Confident Broker Team can break down the percentages of your future sales sold and how rates and fees get higher as you stack on more debt.
Increased debt burden: Each loan or debt advance comes with a repayment obligation, and having multiple debts can increase your monthly debt obligations, putting a strain on your cash flow.
Difficulty in keeping track of repayments: Managing multiple debts can be challenging, especially if they have different repayment schedules and interest rates. This can lead to missed or late payments, which can affect your credit score and result in additional fees and penalties.
Higher interest expenses: Taking on multiple loans can result in higher interest expenses, especially if the loans have high-interest rates or variable interest rates that can increase over time.
Risk of default: If your business is unable to make the required payments on its debts, it may default on one or more loans, which can have severe consequences, including damage to your credit score, legal action, and potentially bankruptcy.
Limitations on future financing: Having too much debt can limit your ability to access future financing, as lenders may view your business as a high-risk borrower.
Before taking on multiple loans or debt advances, it's essential to consider the potential risks and benefits carefully. You should also evaluate your business's cash flow and financial situation to determine whether it can handle the additional debt obligations.
You may be deterred to apply if you have too much debt. Feel free to openly speak to our team as your representation for funding matters. Not all Brokers are the same and who you work with makes a difference.