Merchant Cash Advance – Why?

Benefits of Merchant Cash Advance

A small business may need capital for several reasons such as staying on top of the latest trends, acquiring latest software and technologies, or marketing ideas to grow and expand business. A lot of small businesses are nowadays turning towards alternative lending options other than business loan Canada to raise capital.

A merchant cash advance enables a business owner to obtain an advance of the funds regularly flowing through the business’ merchant account. It is not a loan, but rather an advance based upon the future revenues or credit card sales of a business.

Merchant cash advance providers evaluate risk and weight credit criteria differently than a traditional banker. They evaluate the credit card receipts to know if the business is capable to pay back the advance in a timely manner. In other words, a business sells a portion of future credit card sales to acquire capital immediately through merchant cash advance. 

Interest on MCA are usually higher than other kinds of small business loan options. An MCA provider will approve an advance for a business that might not qualify for a business loan, but shows that they have a steady influx of credit card payments. There can be various reasons for which a small business might consider a merchant cash advance:

  • There is no fixed time frame within which you are required to repay the funds. You can pay it back in your own time.
  • Your credit score may not be as important compared to when seeking other loan options
  • No collateral is needed up front. These are not your standard small business loan Canada, so you don’t have to offer collateral or your credit history in exchange for the loan.
  • It has fast approval time, so you can usually get approved quicker than a business loan
  • Your payback is relative to your incoming cash flow.

As merchant cash advance is more expensive than other business loan Canada options. It is often good to when you are seeking short-term opportunity that requires fast cash. Banking options can take months. Where Merchant Cash Advances can take as little as 24 hours to fund.



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