Answering FAQ’s About Merchant Cash Advance

Every business needs cash. Some businesses need it more than others. And a few need a constant cash flow for running their business smoothly.

But let's be honest, it doesn't always happen, and many businesses take different loans accordingly. Merchant Cash Advance is one of the many ways you can avail instant credit for your business, even with a bad credit score.

Let us answer some questions you likely would be having about Merchant Cash Advance to decide if you are game for MCA.

4 FAQs on Merchant Cash Advance

1. What is Merchant Cash Advance?

Most people think that merchant cash advance is a type of loan, but it is not.

Merchant cash advances are a form of funding that third-party lenders offer to business owners based on their credit card sales volume. The financing is paid back automatically by deducting from your daily revenue generated through the use of credit cards.

A merchant advance can be an attractive source for start-up capital or working capital because you can get it quickly and without any collateral required.

2. How Do You Qualify?

The Merchant Cash Advance approval is based on your monthly credit card sales. Your credit score is taken into consideration. If your business doesn’t have enough sales from credit cards, then you won’t be qualified.

How long you’ve been in business is also a factor which is considered for qualification. Some companies only grant Merchant Cash Advance for businesses operational for at least 1 year. Others may approve the loan amount even if the business just started 3 months ago.

3. What Business Benefit From Merchant Cash Advance?

There are a lot of businesses that can benefit from Merchant Cash Advance. Mostly it’s retail owners, restaurants, and E-commerce is the businesses that can get major benefits.

Any business with majority sales through credit cards can benefit from Merchant Cash Advance.

If your business doesn’t make a majority of its sale through credit cards, you should look for other options.

Read this if you want a clear understanding of whether Merchant Cash Advance is the right fit for your business or not.

4. How Does The Payback Schedule Work?

Merchant Cash Advance does not have fixed monthly payments. The payback schedule depends upon the factor rate and the holdback percentage.

The total amount to be repaid is calculated through the factor rate. If the factor rate is 1.5, it means that for every dollar borrowed you will have to pay $1.50. That is $0.50 per dollar. If you borrowed $10,000 at the factor rate of 1.5, you’ll pay back $15,000 (1.5 x $10000 = $15000).

Holdback percentage is the percentage that will be deducted from the total credit that your business received through sales. This amount deducted is either daily or weekly. If you made sales worth $5000 and the holdback percentage is 10, then for that particular day, 10% of 5000, that is $500, will be deducted. Once the total amount is repaid, these deductions will stop.

Conclusion:

If you are struggling with keeping the cash flow consistently, it will eventually slow your business growth. You should definitely apply for Merchant Cash Advance.

At Greenpoint capital, we understand that not all businesses can keep a good credit score. But that should not stop them from accessing funds when in need.

We can help all businesses in all 50 states and Canada. Business owners can apply online, and we can handle everything electronically if they can’t step foot into our office.

Call us today at (866) 714-7336!