Is your business experiencing cash flow issues? Or do you need quick funding for a new project? A merchant cash advance can help you get quick and hassle-free funds to get your business up and running in no time.
Merchant cash advances (MCAs) offer more convenient and less strenuous business financing to small businesses. Unlike traditional small business loans, MCAs offer an upfront lump sum of cash within a few days, without strict approval criteria. Our business loan agents in Orlando have explained everything you need to know about them.
How Does an MCA Work?
Merchant cash advance loans are relatively easier than other business financing options; that’s why most entrepreneurs opt for them. They have a straightforward process. When you take out a cash advance, a private money lender will give you a lump sum of cash. In exchange, you have to pay a percentage of your business’s daily debit and credit card sales. This percentage is referred to as the “holdback rate” and is generally 10-20% of your daily sales.
You don’t need to put down collateral or have a good credit score to secure a cash advance loan in Orlando. Moreover, you don’t need a long trading history for this financing, making it an excellent option for new and small businesses.
Repayment Structure of Merchant Cash Advances
There are two repayment structures for MCAs.
Percentage of credit and debit card sales
This option is the most preferred way of repaying your cash advances. According to this structure, you have to make automatic daily or weekly payments from your debit and credit card sales until fully paid. These payments are a small percentage of how much your business makes (revenue) from sales.
Unlike usual repayment terms, a merchant cash advance takes payments based on your sales and the period could last from three to 18 months. This means, the higher your sales are, the quicker you can repay the advance. Also, if your business makes less than usual in a month, you can pay a less amount.
This structure is similar to regular business loans. You have to make daily or weekly fixed repayments from your business bank account. The repayment amount doesn’t depend on your sales but instead on an estimate of your monthly revenue.
This repayment structure works for businesses that don’t deal with a high volume of credit or debit card sales.
If you’re still unsure about taking out a merchant cash advance for your business, you can consult Whitestone Fund. Our firm offers cash advances for small businesses and other business loan services in Orlando, FL. Reach out to us now to get started.