Generally speaking, a merchant cash advance is an investment vehicle for businesses or sole proprietors that have run out of options for a more traditional business loan. More to the point, if you are having issues with previous bankruptcies, creditworthiness, or limited liquidity, then this option may move to the front of the line.
Is a Merchant Cash Advance Viable?
At first glance, it may seem like you’ll be hit with too high an interest rate to make the cash advance viable; however, since this is a competitive endeavor – lenders are restricted to reasonable interest rates. What makes them doubly attractive is that you don’t have to put up any collateral – irrespective of your credit score. For a more concrete example, the range of the cash advance is usually between $2,500 and $250,000, with repayment done via the merchant account that you set up with the lender.
Benefits and Concerns
One of the chief benefits of a merchant cash advance (MCA) is the speed of approval and delivery of funds; you can have the money sent to your account in as little as 2 days. Furthermore, the money can be used for a surprisingly large range of business-related expenses – although the fees are higher (to account for your relative lack of creditworthiness) than traditional loans. Since funds are extracted every single day from your merchant account, this amounts to a smaller operational cash flow for your business.
Eligibility Terms for an MCA
The average business that is approved for an MCA has a credit score of 550, has been in operation for a couple of years and has annual revenue of at least $180,000. The lender will need your credit card statements to determine cash flow – there’s no collateral involved, so they need to ensure your volume warrants the amount requested. Usually, business pay off the MCA in less than a year – but the option for fewer months or longer number of months is readily available.
If you want more information on securing a merchant cash advance or putting yourself in the best position for one, give us a call at Kasher Capital – we’ve got the answers you need.