What Are Merchant Cash Advances For Small Businesses?
A Merchant Cash Advance is a flexible alternative to small business loans.
It might also be called credit card receivable funding, credit card factoring or a business cash advance, depending on the provider or the person or forum talking about the product.
While this might be called many things, it is the most common reference to this funding product.
In a nutshell, a Merchant Cash Advance is a really unique funding product allowing small business owners to access working capital now by selling a portion of their business' future credit card sales.
Let's start at the beginning.
A Merchant Cash Advance is unique, but it is not hard to understand.
If your business accepts credit cards, you might be able to use your future sales to access working capital.
A Merchant Cash Advance is not a loan.
It is a purchase and sale.
Customers sell Merchant Cash Advance providers a portion of their business' future credit and signature-based debit card sales in exchange for immediate access to business capital.
This is a financial option that can offer many advantages to a small business owner, including (but not limited to):
The amount retrieved aligns with your business' credit card sales.
The more you earn, the higher the retrieved amount.
During slower periods, the amount retrieved declines.
Does your landlord decrease your rent because sales are down this month? Does your bank adjust your loan payment to match your business' seasonality? No.
So you can see how using the flexible structure of a Merchant Cash Advance can be used to help manage your business' cash flow...
the provider gets paid as the business gets paid.
It might also be called credit card receivable funding, credit card factoring or a business cash advance, depending on the provider or the person or forum talking about the product.
While this might be called many things, it is the most common reference to this funding product.
In a nutshell, a Merchant Cash Advance is a really unique funding product allowing small business owners to access working capital now by selling a portion of their business' future credit card sales.
Let's start at the beginning.
A Merchant Cash Advance is unique, but it is not hard to understand.
If your business accepts credit cards, you might be able to use your future sales to access working capital.
A Merchant Cash Advance is not a loan.
It is a purchase and sale.
Customers sell Merchant Cash Advance providers a portion of their business' future credit and signature-based debit card sales in exchange for immediate access to business capital.
This is a financial option that can offer many advantages to a small business owner, including (but not limited to):
- You can spend the money for any business purpose.
- You don't need personal collateral.
- There are no checks to write.
- Everything is automatically handled by the credit card processor.
You handle your obligation by processing regular credit and signature-based debit card sales.
It is quick and easy when compared to other potential options.
The amount retrieved aligns with your business' credit card sales.
The more you earn, the higher the retrieved amount.
During slower periods, the amount retrieved declines.
Does your landlord decrease your rent because sales are down this month? Does your bank adjust your loan payment to match your business' seasonality? No.
So you can see how using the flexible structure of a Merchant Cash Advance can be used to help manage your business' cash flow...
the provider gets paid as the business gets paid.
