Merchant Cash Advance: Is an MCA the Right Choice for your Business?
Merchant cash advances are often advocated as a financing option to boost working capital, but there’s a lot of misconceptions about these loans. Let’s clear up with a merchant cash advance is and how it can help your business.
What is an MCA?
Merchant cash advances are similar to financing your receivables. Your business sells a portion of your future sales in exchange for a sum of cash which is paid back through your credit card receipts. You and the lender determine the size of the loan plus the amount you’ll pay back the lender and the time frame.
Pros of an MCA
Merchant cash advances have many advantages over other types of lending. The approval process is typically very quick, just one to two days from start to finish. An MCA doesn’t rely on your personal credit score, which makes the approval rate quite high. The amount of documentation required is minimal, especially when compared with traditional loans. You will be required to provide credit card statements from the past 4 to 6 months, three months of bank statements and a copy of your business lease. Some lenders even offer this type of lending without recourse.
What about the disadvantages?
The APR can be very high with merchant cash advances. This tends to be one of the biggest cons. The longer it takes to pay off the loan, the lower the APR. It is something to consider when taking out an MCA. Generally, the payment structure is not determined by a strict payment schedule, but by the amount of your credit receipts. Although this can be beneficial, it can also throw off your budgeting while you’re paying back the MCA.
Discuss merchant cash advances with Growth Lending Group to see how one could fit into your business plan and goals. It might be just the ticket to help you through an off-month or when you need an immediate boost of working capital. Once you have the figures, you can make a choice for your needs.