What is a Merchant Cash Advance?
What is a Merchant Cash Advance?
A Merchant Cash Advance is an advance of capital in exchange for a percentage of your daily card sales (plus a fee). It's provided by a financing company and it's important to note that a Merchant Cash Advance is not to be confused with a business loan as it is not regulated in the same way. Simply put, an MCA does not qualify as a loan because it’s a sale of future revenue.
They are typically repaid automatically on a daily or weekly basis from your processor. In this way, repayments are based on your sales—if you encounter a slower day in sales, your payments will be lower, a higher sales means a larger payment.
For this reason, Merchant Cash Advances are often used by restaurants, seasonal businesses and even smaller retail shops as their daily intakes can vary depending the time of year.
A Merchant Cash Advance can be used to fund essentially any business purpose (working capital, to purchase inventory, cover payroll) or any other similar short-term costs.
Merchant cash advances are pretty easy to qualify for and the turn around time for funding is quick, usually 24 hours. It is important to note that MCA's are also known for a slightly higher interest rate as it's not an actual business loan. Bad credit or even a new start up business can easily qualify but at a higher rate.
There is a lot of flexibility with what you can do with a Merchant Cash Advance. With a simple, one-page application form, you can get funded in as little as 2-days. At Champion Payments our Merchant Cash Advance Programs can help you by turning future credit card sales into working capital.
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