The smarter way to find Merchant Cash Advance Providers
What is a merchant cash advance?
A merchant cash advance, or MCA as it is often referred to as, is particularly suited to businesses that process a large proportion of their revenue through credit card terminals. By allowing the MCA provider visibility of your processed revenue, they can advance funds to you based on your average monthly receipts.
Repayments are taken directly as a proportion of your future revenue.
MCAs are particularly popular with businesses in the leisure and retail sectors as the bulk of their revenue is usually received as card payments.
Why choose a merchant cash advance for your business?
MCAs are best-suited to businesses without many assets, but who have a good volume of card transactions every month. In effect, they allow you to use your card terminal – rather than assets – to ‘secure’ your financing.
They offer a flexible source of finance – as they do not tie up any other collateral that your business has – and the repayments are made as a percentage of your revenue — so they go up and down proportionally with your income.
In addition, MCAs are easy to arrange with minimal hassle because the repayments are simply deducted from your terminal revenue. Unlike other types of lending, there’s no need for credit checks or detailed scrutiny of your accounts. This is a good arrangement for many companies as, unlike fixed payment finance, you can be more confident that you’ll be able to make payments if you hit tough trading times.
One more benefit is that MCAs can effectively be used as a new line of credit by combining them with other types of finance.
Where can you find a specialist merchant cash advance provider?
At Financer.co we can partner you with many MCA providers.
When you apply online for business finance with us, we match your needs with providers who understand your sector and have plenty of insight into the help that your business requires.
What can you use a merchant cash advance for?
What you use your MCA for will, to a large extent, depend on what your card transactions are each month.
For those with smaller revenue from card terminal use, MCAs are more likely to be used to cover the daily operations of a business on a short-term basis.
These may include costs such as:
- Paying staff wages
- Paying utility bills
- Covering rent
For those with much higher levels of card transactions, MCAs could conceivably be used for longer-term investments.
What else should you know about merchant cash advances?
MCAs are one of the most innovative business finance products out there. Despite only being available for a few years, they have already proved to be a big hit with the retail and leisure sector.
The amount you can borrow depends on your turnover. As a rough guide you’ll be unlikely to secure much more than what your business receives through card transactions each month.
For businesses that receive payment in a variety of different ways, MCAs may not offer a viable solution. And, even if your business is mainly card payment-based, many MCAs are only available through transactions made using specific terminal providers.
To be eligible for most MCAs you must have been in business for at least six months and the majority of providers will look for card sales that average at least £3,500 per month, although increasingly lower turnover financing is available.
The terms of MCAs can be restrictive – many providers will insist that you don’t interfere with your card sales in any way and may stop you from moving your business, using other forms of credit or closing your business.
Although MCAs are ‘secured’ by your cash terminal it is not unusual for providers to also require you to sign a personal guarantee that makes you legally liable for repaying the finance that is advanced.
MCAs are a relatively new source of financing and are mainly available from alternative finance providers. You can apply to a number online today for a quick and convenient way to raise funds, with much less hassle than traditional finance options.
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