BestMacApp
No Result
View All Result
Wednesday, May 28, 2025
  • Home
  • Android
    • Apps
    • Apps For PC
  • How to
    • Root
  • Games
  • Software
  • Tech News
  • Block Chain
  • Business
    • Finance
  • Contact Us
Subscribe
BestMacApp
  • Home
  • Android
    • Apps
    • Apps For PC
  • How to
    • Root
  • Games
  • Software
  • Tech News
  • Block Chain
  • Business
    • Finance
  • Contact Us
No Result
View All Result
BestMacApp
No Result
View All Result
Home Business

Myths and facts: a small guide for the merchant cash advances

by Jacob Warrior
October 1, 2021
in Business, Finance
0
Post COVID-19 Learning Solutions - Should Schools Embrace Online Learning?
155
SHARES
1.9k
VIEWS
Share on FacebookShare on Twitter

Cash is the fuel that keeps the small businesses growing. Without access to business loans, even the most successful brands could experience a serious cash flow crisis. 

Unfortunately, small businesses struggle to obtain business loans from traditional owners of capital, like banks, credit unions, and venture capitalists.

To keep business operations afloat, most entrepreneurs turn to alternative lenders to get cash quickly to salvage dire business situations. 

Obtaining a Merchant Cash Advance is one of the quickest ways available to businesses that need to get their hands on quick money to cover bad cash flow. But like any other borrowing vehicle, MCAs have their own pros and cons. 

This article exposes the myths and facts surrounding Merchant Cash Advances(MCA) so that you can make an informed decision before sinking into debt with this type of borrowing.

Let’s jump right in!

What is a merchant cash advance?

This is an alternative funding source available to businesses, especially those with poor credit history. A finance company advances the borrower a direct deposit to be repaid based on an agreed percentage of future credit card sales.

The lender deducts a certain percentage of each credit card sale you make daily, but you may be lucky to find a few who accept weekly or monthly payments. APRs are expressed in factor rates of 1.2 to 1.5 and can easily run into triple digits.

What makes MCAs attractive to entrepreneurs is that they offer cash quickly to businesses with poor credit without the need for collateral.

Merchant cash advance: Pros and cons

Pros

  • Faster lending: An MCA lender offers you cash immediately or within a few days. Money will be in your account around 2-5 business days.
  • No need for collateral: MCA companies don’t ask you for collateral. Thus, your business and personal assets stay safe.
  • Loans for poor credit: MCAs are targeted at businesses with poor credit profiles. Lenders won’t mind your credit score as long as your daily sales can cover repayments.

Cons

  • High APRs: Average annual percentage rates range between 40%-150% and may go up to 400%.
  • Shorter repayment terms: Repayments terms are usually 3 to 12 months
  • Requires a credit card processor account: You must have a credit card processor account with at least $50,000 annual credit sales.
  • Two years of credit sales: Some lenders may require you to have long-standing credit sales history of 2 or more years.
  • Hidden fees: If sales are low and repayment takes longer, the lender may assess an additional fee of up to 10% of the borrowed amount. Late fees may also apply.

4 Merchant cash advance myths debunked

MCAs are loans

Contrary to popular opinion, this isn’t a loan but an expensive purchase of the borrower’s future credit/debit card receivables. 

Unlike loans, MCAs don’t adhere to a fixed repayment schedule and have no specific lending terms. Money is automatically deducted from the borrower’s credit card processor account daily or weekly until the balance and accrued interest finishing. 

You may lose business or personal assets

This is not true because you don’t need to pledge collateral to secure an MCA. The loan is secured using your future credit card sales. Thus, you only need a healthy history of annual credit sales to qualify.

Cash advances are for failing or desperate businesses

Many people associate MCAs with desperate business people who have nowhere else to turn to. That’s not always the case. Any type of business, including successful brands that need cash quickly, can obtain it to inject cash flow into their business.

With rejection rates at 63%-80%, even businesses with solid credit profiles and a long trading history face rejection when applying for SBA or traditional bank loans. Therefore, many merchants may turn to MCAs.

MCAs are the only faster source of financing

Finally, many small businesses turn to MCAs because they think they are the only faster funding source. While that could have been true many years ago, it’s no longer the case. Today there’s a crop of online lenders that offer small business loans within 24 hours at favorable terms than what you would get with one. 

Visit the link in the intro to learn more about an MCA vs. a small business loan.

  • Trending
  • Comments
  • Latest
Artisan Tools 5e in DnD

Artisan Tools 5e in DnD [List of Artisan Tools]

December 22, 2020
EA Sports Cricket 2019 PC Game

EA Sports Cricket 2019 PC Game [ 100% Free Download]

March 26, 2021
Share me for PC

ShareMe Download for PC Windows (7/10/8)

January 15, 2022

Showbox APK Download – Latest ShowBox v5.37 For Android

January 15, 2022
Analyzing Mobile Game User Interaction Patterns Through Social Network Analysis

Analyzing Mobile Game User Interaction Patterns Through Social Network Analysis

0
free downlaod Revolve8 For Mac

Download Revolve8 For MAC – Revolve8 Mac Download

0
free download Immortal Rogue for Mac

Download Immortal Rogue For MAC – Immortal Rogue Mac Download

0
Free Download Star Traders Frontiers For MAC

Download Star Traders Frontiers For MAC – Star Traders: Frontiers Mac Download

0
Analyzing Mobile Game User Interaction Patterns Through Social Network Analysis

Analyzing Mobile Game User Interaction Patterns Through Social Network Analysis

May 24, 2025
Engraving Ideas for Men’s Wedding Rings That Add Meaning

Engraving Ideas for Men’s Wedding Rings That Add Meaning

May 4, 2025
Why Lover Girl Necklaces Are Taking Over Street Style

Why Lover Girl Necklaces Are Taking Over Street Style

April 21, 2025
Why Free Solitaire Games Are the Perfect Mobile Pastime

Why Free Solitaire Games Are the Perfect Mobile Pastime

April 15, 2025

Recent News

Analyzing Mobile Game User Interaction Patterns Through Social Network Analysis

Analyzing Mobile Game User Interaction Patterns Through Social Network Analysis

May 24, 2025
Engraving Ideas for Men’s Wedding Rings That Add Meaning

Engraving Ideas for Men’s Wedding Rings That Add Meaning

May 4, 2025

Categories

  • Android
  • Apps
  • Apps For PC
  • Block Chain
  • Business
  • Cryptocurrency
  • Economy
  • Education
  • Entertainment
  • Fashion
  • Finance
  • Games
  • Health
  • Home Improvement
  • How to
  • Latest
  • Law
  • Markets
  • Opinion
  • Pets
  • Real Estate
  • Reviews
  • Root
  • Software
  • Sports
  • Startup
  • Tech
  • Tech News
  • Travel
  • World

Site Navigation

  • Home
  • Contact Us
  • Privacy & Policy
  • Other Links

© 2025 JNews - Premium WordPress news & magazine theme by Jegtheme.

No Result
View All Result
  • Contact Us
  • Homepages
    • BestMacApp – Apps for PC | Tools for PC | Games for PC – Windows & Mac
  • World
  • Economy
  • Business
  • Opinion
  • Markets
  • Tech
  • Real Estate

© 2025 JNews - Premium WordPress news & magazine theme by Jegtheme.