How to research and apply for a merchant cash advance 101
A merchant cash advance (MCA) is an alternative to a traditional bank loan that provides working capital quickly for a business with debit or credit card sales. With an MCA, a business will receive a cash advance to help their business, which will be paid back through an agreed-upon percentage of daily sales. To apply for a merchant cash advance, you fill out a quick and easy application. An alternative lender may approve you for funding even without a perfect credit history or collateral to offer.
An MCA can be a great option for a business owner to get capital and manage cash flow. If your business is generating revenues but can’t qualify for a small business loan, you could consider an MCA.
What are the required documents to apply for a merchant cash advance?
The application process for an MCA is much simpler and quicker than applying for a small business loan. The entire process can be completed in just a few hours, and your business can be funded the same day!
An MCA lender like CFG Merchant Solutions will typically ask you for these items:
- Your monthly income, through recent bank statements
- Typical credit card transactions
- Some information about your business, and projected future performances (like if your business is expanding, or sales fluctuate seasonally)
Most lenders who evaluate merchant cash advance applications do not heavily scrutinize credit scores; this makes getting an MCA much more accessible to small businesses than a bank loan! Most important to qualifying for an MCA is how much credit or debit card sales your business is generating.
Review your financing contract for an MCA approval.
Once you are in the approval stages, review the financing contract provided by the lender. Typically, an MCA contract will approve you for an advance amount, have a factor rate (the cost of your funding, analogous to an interest rate), and terms for repayment. Repayment is typically daily but can be weekly/monthly withdrawals.