Merchant Cash Advance


What are merchant cash advances?


Merchant cash advances are sources of funding for small businesses not able to take out bank loans. These are most commonly used when a business is in immediate need of cash, but has a cash flow problem. In return for the cash, the lender of a merchant cash advance collects a percentage of the business’s daily credit card sales. There is no interest rate associated with merchant cash advances. Instead, the company lending the money collects a premium from the credit card sales of the company borrowing the money. Technically, these advances are not loans, but rather a sale of future credit card income.


How do merchant cash advances work?


Merchant cash advances provides Working Capital to business owners in need of additional cash flow . When a company is given a merchant cash advance, it agrees to return the money through its future credit card income. The lender collects a fixed percentage of daily credit card sales from the company. The lender keeps collecting the income until the advance is paid back.


The advantages of merchant cash advances


There are a number of advantages of merchant cash advances. The cash gets funded within 3-5 days with very little paperwork to process. Also, no collateral is required to secure the advance. There are no fixed payments and no interest rate, just a one time flat cost, the cost is a tax write off. There is no fixed time period to return the advance. The lender just collects a percentage of credit card sales until the advance is paid back. Usually, the advance is paid back within one year.