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What Is a Merchant Cash Advance Loan?

Countless businesses use loans to finance their operations. During the startup stage, many businesses lack the capital needed to procure goods and services. As a result, they seek loans from banks or private financial institutions. There are several types of loans, however, one of which is a merchant cash advance. What is a merchant cash advance loan exactly, and how does it work?

What Is a Merchant Cash Advance Loan?

Overview of Merchant Cash Advance Loans

A merchant cash advance is a type of loan that’s backed by the credit and debit card sales generated by your business. When a customer pays using his or her credit card or debit card, the money will be deposited into your business’s merchant account. With a merchant cash advance loan, a lender will loan your business money based on the volume of these merchant-deposited sales.

How a Merchant Cash Advance Loan Works

Although it’s known as a “merchant cash advance loan,” it’s technically not a loan. It’s a cash advance. When you apply for a merchant cash advance, the lender will evaluate your business’s merchant account to determine its ability to repay the advanced cash. The more money your business has in its merchant account, the greater its chances of getting approved. At the same time, you’ll probably acquire a larger merchant cash advance loan if your business has a substantial amount of credit card and debit card sales in its merchant account.

Benefits of a Merchant Cash Advance Loan

With a merchant cash advance loan, you can obtain money very quickly. Traditional loans can take weeks or even months to process. A merchant cash advance loan, however, is a faster financing solution. Assuming your business meets the requirements, you can often obtain a merchant cash advance loan in as little as a few days.

You don’t need stellar credit to get approved for a merchant cash loan. Lenders of merchant cash advance loans are more concerned about your business’s sales than its credit. Even if your business has bad credit or no credit, you can probably obtain a merchant cash advance loan, assuming it has a steady flow of credit card and debit card sales coming into its merchant account.

There are different repayment structures for merchant cash advance loans. One method involves the use of automated deposits, meaning the lender will withdraw money from your business’s bank account periodically until it’s been fully repaid. Alternatively, you can choose to repay a merchant cash advance loan using your business’s future credit card and debit card sales.

This article was brought to you by Intrepid Private Capital Group – A Global Financial Services Company. For more information on startup and business funding, or to complete a funding application, please visit our website.

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Intrepid Private Capital Group • January 29, 2021

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