MCA financing describes the purchase of future credit card sales, receivables, or short-term business loans. MCA financing companies provide funds to businesses in exchange for a percentage of the business’s daily credit card income directly from the processor.
The first thing to know about merchant cash advance, also known as an MCA. although it is not a loan. It is funds given to a business, which it has to pay interest like traditional bank loans. However, a merchant cash advance is a sales agreement, that a merchant is selling his future revenue to the MCA financing company.
How MCA finance works?
In MCA Financing, the merchant is selling a fixed amount of his future revenues to the cash advance company. And the cash advance company takes a small percentage every day of the merchant’s gross sales.
They will take until the cash advance company gets the total amount of future revenues that they’ve purchased.
What is the benefit of the MCA financing?
You know, the beauty of the MCA financing is that a cash advance company enables a merchant when his sales are down or slow because of seasonality to pay less. And when his sales pick up, he pays a little more.
What do you need to get MCA financing?
- Minimum 12000+ Monthly revenue
- 500+ credit score
- Last 4 months bank statement
- 6 months in business
how MCA finance interest is calculated
Most of the time merchant cash advance loan’s interest rate panics merchants as it is a bit higher. But if you understand the real benefit of the cash advance, you will never be panicked.
Let’s have an example, suppose are doing a business and all of a sudden you need equipment to keep your business flow going. but you have no extra money to buy it, And it stucks the normal flow of your business.
In that case, if you believe that whatever interest rate a cash advance company is going to charge, it will cover your money until you pay off the full amount of money to the cash advance company. when you feel your revenue and the amount you have to pay to the MCA financing company is balanced, you can consider a cash advance. Because after you pay off, the equipment is yours. And you can use it lifetime
MCA finance usually has a very fast application process, there is no collateral required. It takes a few minutes to complete the application. After the application is completed, it takes less than 48 hours or less to get a merchant funded.
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