What is A MERCHANT
Accounts receivable financing lets you get paid for your outstanding invoices right away—for a fee.
What Do I Need to Qualify?
5+ months in business
400+ credit score
$75,000+ in annual revenue
Disclaimer: These are general qualifications. Other information might be considered during your application.
HOW DO I APPLY?
Merchant cash advances are often provided through online financing companies. They are the most expensive product on the market, so you might want to compare an MCA with something like a short-term loan. Apply to both below.
Merchant Cash Advance at a Glance
Merchant cash advance is a quick, easy way to get a business cash advance with no need for collateral—even if you don’t have a great credit score.
maximum loan amount
$2,500 to $250,000
Automatically deducted each day through your merchant account
1.14 to 1.18
Pros and Cons of a Merchant Cash Advance
Quick access to funds
Easy approval process
Bad credit is accepted
Suitable for wide range of
Higher fees than traditional loans
Less flexibility to change merchant service providers
Daily deduction of credit card receipts reduces cashflow
Who Qualifies for Merchant
Would your business be eligible for a merchant cash advance?
If you have little or no collateral, limited business history, or a low credit rating, merchant cash advances could be a solution to your financing problems.
If your business has limited history, doesn't have collateral or a low credit rating, merchant cash advances may be a quick fix for your financing problems.
Merchant cash advances are usually pretty easy to qualify for due to low eligibility standards so the majority of businesses should be able to qualify.
If your business has a large portion of revenue coming through credit card payments like a restaurant or retail store for example then you can use a merchant cash advance as a short term business funding tool. It's can be very beneficial for inventory purchases, working capital, debt payments, unplanned payments and more.
Most Customers who qualified had
Time in Business
Over 2 years
What documents will I need to apply?
Voided Business Check
Business Tax Returns
Credit Card Processing Statements
How Does a Merchant Cash Advance Work?
Every business could use some extra money…
However, not every business owner has the time and energy to search out the lowest rate they can qualify for.
Plus, even if you do find a great rate and send out an application, there's a chance you may not qualify.
At LendingMatchup, we pride ourselves on having a marketplace that can benefit all different types of small business owners, including those with bad credit.
If you don't have the time and patience to wait for a more conventional loan or wouldn't qualify if you did apply, than a merchant cash advance may be the best option for you.
What Exactly Is a Merchant Cash Advance?
A merchant cash advance is a cash business loan that can be funded with almost no paperwork involved in as little as 24 hours from the time you apply.
In return for the advanced lump sum, you agree to pay the lender back a percent of your daily credit card sales.
While this sounds like a great option for business owners because of the fast application process and quick funds, it's also the most expensive business loan option available.
Before applying for a merchant cash advance make sure to proceed with caution.
Different Types of Cash Advance?
Most people look at a merchant cash advance and a business cash advance as the same. However, there are some lenders who offer business cash advance products that are different than a typical MCA loan.
For example, Swift Capital will purchase part of your future sales the same as an MCA would, but instead of paying back a percent of daily credit card sales, you will be paying them back a set percent of your total sales.
Payments are withdrawn from your business bank account through an ACH.
Just like a merchant cash advance, when your business is doing good you pay more and when it's slow you pay less. Since your payments are determined by your business sales, there's not set term.
If a merchant cash advance is one of the options your considering, its best to compare a true business cash advance loan with the other options available for your business.
Merchant Cash Advances & Factor Rates
Merchant cash advance providers measure their fees with a factor rate instead of an interest rate.
While most lenders measure their fees with an interest rate, MCA lenders use a factor rate instead.
A factor rate usually ranges from 1.14 to 1.48. To measure how much you would need to pay back, you multiple your loan amount by your factor rate.
For example, the if you borrow $100,000 with a factor rate of 1.14, you would pay back $100,000 x 1.14 or $114,000 total.
If you were to convert factor rates into APR, the rates can start as low as 15%, but also go all the way up in the triple digits.
How Long Will It Take To Pay Off a Merchant Cash Advance?
The typical time frame to repay a merchant cash advance is 8 or 9 months.
However, loan terms can be as short as 4 months and as long as 18 months depending on your particular business.
The higher the fixed percentage of credit card sales your paying your loan back with, the faster you'll pay back your loan.
If you decide to get this type of loan, just remember that the higher fixed percentage of credit card sales your paying back also means you'll be left with less cash flow after making payment.
Deciding If a Merchant Cash Advance
Is Worth It
How to decide if a merchant cash advance is the right fit for your business.
While paying back a loan with daily credit card sales can definitely put a hamper on your cash flow, it does have some benefits compared to a conventional business term loan.
With a term loan, during slower weeks and months, you'll still have to pay back the same amount each month or suffer with late fees.
However, with an MCA loan, you'll be able to pay back a lower amount during slow times and larger amounts during busy times.
The other advantage of an MCA loan is that you can still be approved with bad credit or no credit compared to the tough credit restrictions most term business loans enforce.
At the end of the day, its up to you to understand your business financials and exactly whats the best option for your business.
Just keep in mind that a merchant cash advance is the most expensive business funding option available to small business owners.
What Will a Merchant Cash Advance
To calculate your cost of borrowing money with a merchant cash advance you simply multiple your factor rate by your total loan amounts.
For example, lets say you're advanced $50,000 with a factor rate of 1.20.
$50,000 multiplied by 1.20 is $60,000, which is your total repayment amount that will come out of your daily credit card transactions.
At first, it might seem like you're paying a 20% interest rate, however this can be deceiving.
Translating Factor Rate Into APR
You have to determine the actual cost of the merchant cash advance by its APR.
If your lender takes 15% of your future credit card sales and your estimating $50,000 a month in credit card transactions, you'd repay the advance in 240 days with daily payments of $240.
That adds up to 57.06% interest, which is much higher than it seemed at first glance.
Although MCA loans are a fast and easy option, they're only worth the price if you know for sure that you can pay them back very quickly and without sabotaging your companies cash flow.
Just be sure to check out all your options first to find out if you qualify for a cheaper option before moving forward with merchant cash advance funding.
Swift Capital Merchant Cash Advance
Swift Financial provides a source of working capital for small businesses through their product, LoanBuilder. LoanBuilder is similar to a short-term loan, paid back with automatic weekly payments from business checking accounts.
FAST 5 MINUTE APPLICATION
LOAN AMOUNT: $5,000 - $75,000
INTEREST RATE: 2.5% to 18.75%
REPAYMENT TERM: 13 - 52 WEEKS
Complete on Partner's Site
CAN Capital Merchant Cash Advance
CAN Capital offers both short-term loans and term loans. CAN Capital's short-term loan has terms 3 to 24 months in length and is repaid through small, fixed daily repayments from the business checking account. Their term loan has terms 1 to 4 years in length and is repaid through monthly payments from your business checking account.
FAST EASY APPROVAL
VERY TRUSTED LENDER