You want to grow your business, but you don’t have the funds to do it right now.
Maybe there is a big-ticket piece of equipment that could help you expand your offerings. Or maybe you’re eyeing up a second location. In either case, if you need financial help, a merchant cash advance (MCA) could be the answer you’re looking for.
Today we will walk you through what an MCA is, how it works, and how it can help you grow your business.
How Does a Merchant Cash Advance Work?
The MCA is not a loan. It is a form of funding. So, it is not offered through banks or traditional lenders. Instead, you would apply through a company like Payvant Capital to get the funds you need.
Because you don’t have to go through a traditional lender, you’re not held back by traditional lending regulations or criteria. MCA providers are better positioned to work with small business owners like you that show a lot of promise, but don’t necessarily have a lot of equity, credit history or assets at the moment.
You may qualify for an MCA if your business has:
- Been in business for more than 2 months
- Over $10,000 a month in deposits
Essentially, your provider will give you an advance of funds, and you will pay the amount back (plus fees) via a percentage of your future revenue or transactions.
Is a Merchant Cash Advance Better Than a Loan?
Most small business owners are all-too-aware of the high bar that major banks have set for small business loans. Sadly, the more you need one, the less qualified you likely are.
The MCA works the way that small business funding should work. You’re being assessed based on your present and your future, not your past. More flexible terms and criteria mean that entrepreneurs like you can get the help they need in those challenging early years.
Also, if you get a small business loan, you’re making the same (often large) payment towards the balance every single month no matter what. And trust us when we say you do not want to default on those payments.
On the other hand, because an MCA’s re-payment terms are a percentage of your transactions, your payments will be lower during low sales periods.
This is particularly helpful if you’re using your funds to expand or renovate your business and you need to close up shop for a few weeks. If you went with a loan instead of an MCA, you would have to make the full monthly payment, even though you really only have 2 weeks’ worth of sales.
The Bottom Line
Is the MCA a cure-all funding solution for all businesses? No. There is no such thing.
However, if you’re still new to the market and looking to grow, the MCA can help you inject some funds into your cash flow so you can buy new equipment or pay for a new marketing campaign.
They are designed for small business owners like you, so they just might be what you need to take your business to the next level.