Merchant Cash Advances Explained

Merchant Cash Advances Explained

If you are a business owner, at some point you will likely feel the need for capital to keep your company afloat and growing. Deciding on the right type of funding for your business is important. One type of financing is called a Merchant Cash Advance, which is discussed below.

Difference Between a Loan and a Merchant Cash Advance

A Merchant Cash Advance is an advance of cash based on the amount of your company’s projected future sales. A Merchant Cash Advance provider will concentrate on your credit card sales rather than other aspects of your business. A business loan will be predicated on the overall health of your company, not just your credit card sales.

Advantages and Disadvantages of a Merchant Cash Advance

One great advantage a Merchant Cash Advance gives a cash-strapped business is a fast approval time, usually about seven days. One disadvantage is that, unlike a loan, a Merchant Cash Advance will not help to build your business credit, as Merchant Cash Advance providers are not required to report the advance or the repayments to the credit bureaus.

The Cost of a Merchant Cash Advance

The cost of a Merchant Cash Advance varies depending on the type of business and the term length of the advance, but you can expect to pay $1.20–$1.50 for every $1 advanced to you.

How Repayment Works

Generally speaking, repayment represents a percentage of your business’s daily or weekly credit card sales (the holdback percentage). Payments are made via your credit card processor, which it may be necessary to change.

Find Out if a Merchant Cash Advance is the Best Funding Choice for Your Business

If your business involves regularly processing a sizable amount of credit card transactions, a Merchant Cash Advance can provide you with funding in a very short amount of time. Jade Dog Capital can provide you with a Merchant Cash Advance or any other type of financing that may be able to meet your needs. Please contact us for an assessment of your requirements and suitable options available to you.