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3 Tips to Follow before Going For a Merchant Cash Advance

3 Tips to Follow before Going For a Merchant Cash Advance

When small businesses are in need of urgent cash, it hardly makes sense to contact a corporate lender or a bank for traditional loan options. While most don’t qualify, even those that do will have to go through a lengthy application process and wait for a long time to obtain the funds. A more appealing and timely option is a merchant cash advance.

Not only are merchant cash advances available quickly, they are also very easy to qualify. They are available to businesses such as restaurants and retail stores that have a decent volume of credit card sales transactions on a daily basis. Even businesses with bad credit can get merchant cash advances quite easily.

The term might still be foreign to many; but the merchant cash advance industry has been growing in fact at quite a rapid pace. It was just a few providers you would have found a few years ago; today merchant cash advance is a 10 billion dollar industry, with many providers operating from different parts of the world.

If you are in need of emergency financing to run your business smoothly, you can find a merchant cash advance provider quite easily. There are many that contact businesses like you by purchasing merchant cash advance leads from professional lead generating firms. You could go with any of them or even find out from your credit card processing company if they can provide you with the required advance. Nevertheless, before doing so, there are three things you need to consider:

Evaluate your Requirements

Many small businesses apply for merchant cash advances for a variety of purposes like purchasing new equipment/inventory, business expansion, store renovation, paying up salaries/rent/utility bills and marketing/advertising. Basically, they work very well for emergency needs. However, if you want to furnish your office with the money you obtain from merchant cash advance, it is wiser to go for a traditional loan. It could nevertheless be the only option if you have been struggling with bad credit.

By taking out a merchant cash advance you are actually giving away a decent portion of your future credit card sales. Hence it is important to use this amount wisely. You will have to prioritize your requirements and take only that amount that you actually need. If there are certain items on your list that could be postponed for a few months, they can be satisfied by going for a traditional loan at a lower rate of interest.

Understand the Repayment Plan

Merchant cash advances work very differently when compared to traditional loans. The repayment will start as soon as you receive your advance. There are no fixed monthly payments here. As soon as a credit card sales transaction happens at your point of sale, a pre-agreed percentage of the amount gets transferred to the merchant cash advance provider’s account automatically. This transfer happens with every credit/debit card sales transaction until the advance you have borrowed has been completely repaid.

There are certain things you need to look for when it comes to repaying your cash advance. First thing is to find out if you would be able to pay back the advance through your future credit card sales, within the time period specified. If your sales are predictable and if they are consistent throughout the year, you should not have any problem estimating your financial timeline. However, if your business is seasonal, you may have to look for providers who are flexible with respect to repayment time periods.

Another thing you need to consider before signing your merchant cash advance contract are your business expenses and other debts. You will have to check if you can still manage meeting all these, without the chunk of your future credit card sales. You may even need a business plan to increase your business or improve your profitability until you pay back your advance completely.

Go through the terms of the contract completely

You may be signing many papers on a daily basis as a small business owner; but this is one paper you need to pay special attention to. You would want to go through it thoroughly, while paying close attention to the service agreement. It is this service agreement that details your payment plan, charges and the terms that you have agreed upon. There are two things you need to specifically look for, here:

  • The Post-signing fees:In case you need to buy new credit card equipment or switch to a new credit card processing company in order to obtain merchant cash advance, you may have to pay up some post-signing fees. Then there are also the service fees and the UCC filing fees. You may have to consider all these before signing your contract.
  • Interest rates:Merchant cash advances are calculated based on factor rate rather than an interest rate. It could be generally between 1.14 and 1.48. When converted to APR, this rate may be equal to as low as 15% or as high as even a triple digit rate. Nevertheless, it is very important to compare these rates with the interest rates that you pay on traditional loans. This will help you understand whether you are getting into a good deal or a real bad one.

Time is very precious in the world of business. Merchant cash advances make it possible for small businesses to attend to their financial needs within time. Nevertheless, before you sign the contract with a merchant cash advance provider who contacts you via

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Merchant Cash Advance Leads make a better option for MCA lenders

Merchant Cash Advance lenders have two options when it comes to finding small business owners who are in need of short-term financing – one is to hire MCA brokers and two is to buy Merchant Cash Advance Leads from professional lead generating firms.

A few years ago most such lenders would get their products sold through brokers who adopted the traditional door-to-door sales approach to gain customers. In fact this offline selling tactic continued even after Merchant Cash Advances started being offered online.

Merchant cash advances are available easily and there are many individuals and firms that offer them. Yet only one in every 10 brokers would manage to do good business. It is the crises of conscience they feel while hard selling this advance. They feel that the high-interest rates and unfair repayment schedules can end up killing the cash flow of their clients.

As an incentive to increase their sales, MCA lenders have started offering higher commissions to Merchant Cash Advance Brokers. For instance, a $20,000 MCA can get a broker a commission of $2,200. However, most Merchant Cash Advance brokers started resorting to unscrupulous tactics while selling these advances. The reason is that apart from MCAs, these brokers would also sell other short-term small business loans offered by different financing companies.

Most MCA firms and private lenders have now decided to cut down their dependency on third-party brokers. This can be taken as an advantage to the lead generating firms that offer

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What Should Small Business Owners look for, before Choosing the right Merchant Cash Advance Provider?

Merchant Cash Advances are easily available to Small Businesses, within a short span of time. However, as a small business owner, you will have to do your research before you zero in on the right MCA provider.

Not all MCA providers are similar.While some resort to deceitful practices, many of the Providers have been out of business since quite a few years now.  Nevertheless, there are plenty of providers available in the industry, some of whom may even try to contact you directly via

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How exactly does a Merchant Cash Advance Work?

Merchant cash advance is not like any other typical loan that involves monthly payments that need to be paid until the loan amount is paid off in full. It is a cash advance that is given to a small business in exchange of its future debit and credit card receipts.

The typical borrowers of

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Merchant Cash Advance - 5 Prospective Clients to Focus on

When not to go for a Merchant Cash Advance

You may be eligible to apply for a merchant cash advance. Many MCA lenders may even have contacted you via Merchant Cash Advance Leads. However, this doesn’t mean you have to go for one, irrespective of the situation you are in.

Loans are always risky and merchant cash advances are not an exception to this rule. You will need a good volume of credit card sales transactions per month. Your business should be in a good condition to be able to repay the advance and yet operate successfully.

It is true that

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