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There are times in every business owner’s career when extra money is needed to bridge the gap. Or, when opportunities arise and extra funds are needed, quickly, easily, and securely to capitalize on openings in the marketplace. Experienced business owners value this access to capital. In these circumstances, we offer the Merchant Cash Advance.
How does it work?
For those unfamiliar with Merchant Cash Advances or MCA’s, it all starts with a finance method called “factoring.” This has long been used to turn business assets into cash. Factoring generally applies to the purchase of accounts receivables or invoices by a third party. Businesses with standing invoices and orders can sell those orders to a third party at a discount for immediate cash.
Sounds good, but what if those sales haven’t happened yet?
Many small business owners that accept credit cards have a “hidden asset” that most traditional funding sources don’t even consider — their future credit card sales. If the business has a solid track record of credit card sales, the future card sales, or a portion of the sales, can be sold at a discount to provide the working capital to meet a small merchant’s immediate needs. This program is not a loan. It is the advance purchase of a small portion of future sales. It is a Merchant Cash Advance. The amount of future sales to be purchased is determined along with the discounted amount to be paid to the business. Since this is only a purchase of a portion, or fixed amount of the future sales, the merchant normally delivers the purchased sales to the buyer as a percentage of the future sales. This is unique because there is no fixed payment amount, no fixed term and no interest rate.
The business owner delivers the purchased sales to the third party purchaser based on the established percentage as they occur. This means the amount will fluctuate on a daily basis with the merchant’s overall business and credit card sales. This is a huge benefit to the business owner as they will not be facing a fixed payment if their business slows for various reasons like seasonal or temporary business reductions. The retrieval of the future sales automatically adjusts to your business cycles and trends!
Sounds confusing. I need an example.
As the merchant batches out their Visa, MasterCard, Debit Card, and Discover Card. sales on a daily basis, a fixed percentage is retrieved from the merchant’s credit card sales volume. This “Specified Amount” is forwarded to the funding firm every day until the total amount is repaid in full.
This percentage is called the “Specified Percentage.” For example: A merchant has a 15% Specified Percentage. At the end of the day they batch out $100 in V/MC volume. $15 would automatically be retained while the merchant would have $85 (minus any processing fees) deposited into their bank account. They would get to keep 100% of all cash and non-V/MC/Debit/Discover transactions.
Why not just get a loan from a bank?
If you’ve tried to obtain funding at your local bank, you know it is extremely difficult. Most SBA loans require a lien on your home and an 800 credit score. Unlike a bank that favors large loans, outside collateral and a long-term loan period, the purchase agreement for a Merchant Cash Advance is much shorter in length and will normally be completed in one year or under. In fact, most are completed in six to eight months. These agreements are generally for small amounts ranging from $5,000, to an average of about $50,000, all the way up to $300,000. The number of records or documentation needed is much less, and no application or upfront fees are charged. This results in a very high approval rate and fast receipt of funding to you, generally within 7 to 10 days. Try to get that at your local bank.
The underwriting process does include evaluations to ensure that the portion of sales deducted does not overly burden your business, and that the purpose for the funds is one that will sustain or enhance the business and increase future sales and profit. There are many benefits to your business. Use a portion of your future sales — or hidden asset — in exchange for upfront cash today. It is convenient, fast and simple. Since the retrieval is a percentage it adjusts to your credit card sales. There are no invoices to read and track and no checks to write and mail for either program. It is all accomplished through a seamless automatic process.
- No application fees or closing costs of any kind.
- Absolutely no obligation until funds are deposited into your bank account.
- Funding is fast. Have the capital in as quick as 5 working days.
- Easy approval process. Have an answer within 24 hours.
- Simple paperwork.
- Limited financial review.
- Use the funding for any business purpose.
- Does not show as a loan on any credit report.
- No personal guarantee required.
- No collateral or liens on your home.
- Funding will be wired directly to your bank account!
How much does it cost?
Factor rates range from 1.35 to 1.48 depending on the level of risk, the length of time in business, and your credit score.
Apply today!
Click here to go to the application download page.
