Merchant Cash Advance FAQ

A merchant cash advance (MCA) is a type of revenue-based financing for businesses that involves a lump-sum payment in exchange for a percentage of future sales. It is typically used by small businesses that may not have access to traditional bank loans or have difficulty qualifying for them. With an MCA, a lender provides an upfront amount of cash to a business, which is repaid by daily, weekly or monthly payments. The repayment period can range from several months to a year or more, depending on the terms of the agreement.

The main difference between a merchant cash advance (MCA) and a loan is the way they are structured and repaid.

With a small business loan, a lender provides a business with a lump sum of money, which is then repaid over a set period with interest. The repayment is typically made in equal installments and may be secured by collateral or a personal guarantee.

In contrast, with a merchant cash advance, a lender provides a business with a lump sum of money upfront, which is then repaid through daily, weekly or monthly payments. An MCA, is a purchase of future sales by lender based primarily on a business revenue.

Here are a few other key differences between MCAs and loans:

Credit requirements: Loans often require a high credit score and a strong credit history, while MCAs may be available to businesses with lower credit scores.

In summary, while both MCAs and loans can provide businesses with the funding they need, the way they are structured and repaid can differ significantly. It’s important for businesses to carefully consider the pros and cons of each option before deciding which one is best for their needs.

Funding amounts vary from business to business, but generally merchant cash advances range from $5,000 to $250,000.

A business can use a merchant cash advance in a variety of ways, depending on its needs and priorities. Here are some common ways that businesses use MCAs:

Working capital: Many businesses use MCAs to fund their day-to-day operations, such as buying inventory or paying for overhead expenses.

Expansion: A business may use an MCA to finance expansion efforts, such as opening a new location or launching a new product line.

Marketing: Some businesses use MCAs to fund marketing campaigns or advertising efforts to reach new customers and increase sales.

Equipment or technology upgrades: A business may use an MCA to purchase new equipment or upgrade technology to improve efficiency and productivity.

Emergency expenses: An MCA can also be a way for a business to get quick cash to cover unexpected expenses, such as equipment repairs or unexpected bills.

Just as our name states, CFGMS looks forward to providing small businesses with working capital solutions.

CFG Merchant Solutions provides revenue-based financing for it’s customers, catering to small businesses that have been denied small business loans by conventional lenders. Our approach is different from traditional banks, in the sense that we look to work with your business on an individual basis. If you’re a business that is looking for working capital today, apply on our website within seconds and a representative will contact you directly to discuss your financing options. Here at CFGMS we provide everyday working capital solutions.