Can MCAs Really Help Your Business?

If you’re running a business that brings in a significant amount of revenue via credit card sales, then you might be in an excellent position to take advantage of merchant cash advances, or MCAs. This financing method is similar to a loan, except that you pay it back by means of a certain percentage of your credit card earnings on a monthly basis. That’s great for you because, if you have a lean month, you won’t need to pay as much to your lender.

How do MCAs work? Well, the basic arrangement involves a lender that gives you a lump sum in exchange for taking a small percentage of your monthly credit card sales for a certain period of time. You won’t need to provide any documentation of your credit rating, or even collateral, to receive this type of funding. All that really matters to the lender is that your credit card sales are demonstrably strong, and most lenders would like to see an average of $5000 per month for the past four months or so. The fact that a credit rating is unnecessary is especially valuable to companies that have no credit established. In such cases, commercial loans are very hard to come by, and usually require collateral if granted at all.

Another fantastic aspect of merchant cash advances, for those who want to make financial management as simple as possible, is that all revenue coming from credit cards automatically pays the lender as well as you. Rather than trying to keep track of interest payments when paying off a loan, you really don’t need to pay much attention to paying back your lump sum from MCAs. Your customers basically do it for you by purchasing your products and services. If your credit card sales are relatively low during a particular month, you won’t have to pay as much back to the lender. Of course, it’s in the interests of both you and your lender to have robust credit card sales, but it’s also good to know that your “interest rate” varies according to your profits.

Applying for MCAs is a quick and easy process, and you’ll probably be able to complete it within a day or two. It’s a great way to take advantage of opportunities that you want to jump on ASAP. If you need to hire extra hands for a big holiday season or take your team to a trade show, a merchant cash advance might be the easiest and most effective way to fund your endeavors.