Not all funding options are created equal. The most common type of business cash advance is the Merchant Cash Advances (MCA). A business cash advance is an option for merchants that need their funding quickly and without unnecessary constraints because of their credit score.
When the unexpected happens in a small business, the businesses’ cash flow can become tight. When the unexpected and the need for cash collide, it may be time to consider a business cash advance.
A business cash advance is an alternative unsecured cash advance. New ownership of business, bad credit, small funding requests all have the effect of preventing a business from obtaining traditional financing options. FAST CAPITAL 360 can help small business owners receive the capital they need in spite of these situations.
A business cash advance is very different from a business loan:
Business Cash Advances v. Business Loans
|Extensive Paperwork||Fixed Repayment Schedule||Requirement of Collateral||Payback Requirement|
|Business Cash Advance||No||No||No||Yes|
For example, you are not fixed to a repayment schedule and do not require collateral with a business cash advance. Business loans require extensive paperwork: the unsecured business cash advance does not. Since a business cash advance is not credit dependent and can be approved quickly, funding can be available in days as opposed weeks or months. This type of funding is typically not offered through a traditional bank. However, the cost of MCC funds can be high since the risk to the lender is great.
If you are considering a merchant credit card advance, it is important to be sure the cost of the capital is not outweighed by increased revenue or avoiding a business issue. The most common type of business cash advance is the merchant cash advance, which our company has reservations about.
Cash advance style loans have become increasingly popular among business owners in previous years. Some merchant cash advances are superior to others. Ranking in the top 10 business cash advance companies on Trustpilot, we pride ourselves on stellar service and knowledge and serve all 50 states.
What sets us apart?
- We work with a select few investing partners to minimize inquiries on your credit and to offer the best approvals for your business.
- Decisions on your approval happen, typically, within a few hours.
- Fast approvals mean fast funding. Our customers usually have the funds deposited within 24 hours of their approval.
- Working closely with our partners, we offer competitive rates and terms.
- Our repeat customers receive upgraded programs for their loyalty.
This company I would recommend to anyone and everyone I know. We have tried several advance funding companies so far. FAST CAPITAL is the absolute best out there. they are FAST, THOROUGH, and PROFESSIONAL. No lies, no misleading information. They really care about helping struggling businesses with financial needs. My husband and I own a RESTAURANT/LOUNGE. We have been through some rough roads but with the help of Fast Capital, we have made it through the experience. Customer service is so great; we are using them again to finance another project for us.
Fast Capital was very thorough and very efficient getting my company the money we needed when we were in a high growth curve. Highly recommend them for funding needs.
How Merchant Cash Advances Work?
- A MCA is paid back based upon your daily credit card transactions.
- The creditor takes a percentage of the daily credit card transaction until the amount of the advance (plus interest) has been paid back. The payment is taken automatically at the end of each day.
- The percentage taken by the lender for the merchant advance is always the same; it never varies due to the frequency of customers.
While these types of funding options are convenient, they often carry high-interest rates and fees. They may also require that you install a new credit card processing and point of sale (POS) system. There are some other disadvantages:
Limitations of Merchant Cash Advances
MCAs are an expensive solution– These types of cash advances can be more expensive than other funding products. Typically, you can pay anywhere from 9 percent to 50 percent over the amount of your initial funding.
MCAs are short-term solutions – These fast merchant cash advances have a term of anywhere from three to fifteen months. They are short term funding for a short-term need. It is important to consider if this merchant cash & capital will help you generate enough revenue to repay the initial financing plus interest.
MCAs may not be the right solution – If they are not used correctly, Merchant advance funding can add to your cash-flow problem over time.
MCAs can be a risky solution – Many things in business are risky, but one of the biggest risks for some businesses is selling future sales. In a sense, merchant cash funding is essentially selling a portion of your future sales. You can’t predict the future: your sales could go through the roof. Or they could drop precipitously. While risk applies to any type of funding or financing product, the concern with MCAs is that the cost of obtaining them is high and the repayment period is short.
Requirements for cash or capital as a merchant
- Minimum $150,000 in annual revenue for the business
- At least one full year of operating the business
- Up-to-date bank statements
- A personal credit score of 500 or greater.
At Fast Capital 360, we look at the larger picture of a business. When evaluating a company, it’s important to us that we get the whole story so that we can then eliminate some of the negative elements of a lending history or exclude certain requirements to obtain an MCC advance. Our make sense approach to funding has allowed us to provide MCCs to merchants with bad credit or short business histories.
As a small business owner, it can be difficult to make a decision about which form of funding is best for your financial scenario. A merchant cash advance, like any other form of lending, has its dangers and its benefits. Fast Capital 360 understands the gravity of your decision and is here to support you in any way we can, so you can do what you feel is best for the future of your business. We never pressure business owners into a decision and ensure that all of our underwriting is done in a clear and honest manner.
If you are unsure of whether a merchant cash advance is the best option for funding your business, our business advisors are on-hand six days a week to discuss financing details with respect to your financial situation.
For more information on why Fast Capital 360 is the best choice for merchant cash advances, contact us today!