Merchant cash advance financing offers a different approach for business owners to receive funds for their organizations. It is not a loan—which obligates you to make a monthly payment until you pay back what you borrowed—but a lump sum of capital provided to you in exchange for a portion of your business’ future credit card sales.
Merchant cash advance financing can offer many benefits to business owners, so it’s important to consider your options carefully to determine if it’s the right decision for you.
It’s all about your business’ credit card sales.
This kind of financing is geared mostly toward businesses with strong and consistent credit card sales, such as restaurants, hotels, retail stores and supermarkets.
The amount of the advance varies depending on estimated future sales, your credit score and other factors. When you submit a one-page application and six months of your company’s bank and credit card processing statements, the merchant cash advance provider will determine what percentage of your credit card sales goes toward paying back the funds advanced, as well as the total amount you have to pay back.
There aren't many restrictions on what you can use the money for.
When you apply for a merchant cash advance, you aren’t required to tell your provider how you plan to spend the funds received. This lets you determine what aspects of your business need the most financial attention at the moment.
Some business owners may decide that expanding is where they should focus, which could include opening a new location, hiring new employees, purchasing more equipment and/or developing new products. Other business owners may concentrate on investing in marketing campaigns, replacing outdated machinery, renovating their current location and/or paying off old debt that’s weighing them down.
Applying for merchant cash advance financing is simple.
Merchant cash advances tend to be easy to apply for and have more flexible requirements. Therefore, the funds are quick to obtain, which lets you grow your business and increase your profit margins that much sooner. In fact, some providers give you access to working capital less than a week after you get approved.
Similar to a business loan, you’ll be expected to share certain documentation with the merchant cash advance provider during the application process. However, some information isn’t deemed as important. This includes your credit score. While you may have to divulge your credit report, the provider won’t necessarily focus on it as much as a bank would if you were applying for a loan. Still, this depends on the specific provider’s qualification requirements, which they should clearly explain to you.
Besides basic information, such as your business name, ID, address and phone number, you should be prepared to also provide:
- Social security number
- Financial statements
- Credit card processing statements
- Business tax returns
Find out what else you need to apply for a merchant cash advance.
Interested in getting a merchant cash advance? Learn more about MPX’s Merchant Cash Advance program.