Did you know?
Is your business getting bombarded by telemarketers trying to sell you a merchant cash advance? What is a merchant cash advance?
To put it simply, this program buys future credit card sales, and the amount they will pay is based on your business' historical card sales. So if you do an average of 10k a month in credit card sales, they may offer to pay you 5k to 20k for 7.5k to 30k in future sales depending on various factors, ie credit, product sold, etc. They usually deposit the purchase price within a week or two, and then start recouping their purchase by collecting a percentage of your daily credit card sales. They usually want to collect their investment back in about 7 months, so the percentage they take daily is set so that timeframe can be met.
A merchant cash advance can be expensive money, but there is no personal guarantee, it is fairly quick to be approved, and can be contracted even with a lower credit score. For those that can't get a bank loan, or those that need fast cash to replace a necessary business item, an MCA may be beneficial. For those looking to expand, open a new location, or increase inventory, an MCA is beneficial if the merchant can't get a bank loan.
One merchant once told me, "I'd rather have a partner that all they want is cash, than a partner that wants to tell me how to run my business." This was his reason for getting a cash advance to open 2 new locations and purchase inventory. That reason has always stuck with me.
I hope I've given you some insight into the MCA. Feel free to ask any questions you might have, and I will get you answers.
Now you know.