MERCHANT CASH ADVANCE VS BANK BUSINESS LOAN: LEARN THE DIFFERENCE

Many small to medium businesses turn to alternative financing options such as merchant cash advance (MCA), which provides a lump sum of money when your business needs capital.

What sets MCA from a business bank loan is that technically, MCA is not a loan.

Merchant cash advance providers are not subject to the state and federal regulations that apply to banks. This is how it works: MCA providers purchase future receivables at a discount. What this means is that you, as a business, grant a discount in exchange for the quick access to cash. In the following months, every time you make a credit card sale, a portion of your sales is remitted to the provided until you have paid off the total amount you borrowed.

Here are the other ways a merchant cash advance is different from a business bank loan:

  • You deal with less paperwork

The process of getting a merchant cash advance is less onerous and you can get it much quicker than a typical bank loan. Typically you get the cash in less than a week.

  • No collateral

You do not have to put your assets, such as your home, on the line as collateral for a merchant cash advance.

  • Higher approval rates

You must show a track record of debit or credit card receivables to be able to get an MCA. Usually, businesses that qualify for a commercial loan also qualify for a merchant cash advance.

  • No fixed payback schedule

Your payments will depend on your sales. If business is slow, your repayment slows down as well.

  • No use restrictions

You are allowed to use the money you get from an MCA provider any way you choose.

More questions about merchant cash advance? Contact us today!

Want to know if you qualify for a merchant cash advance? Apply now!

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