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A Business Owner's Guide To Merchant Cash Advance

If you don't have a good credit score or an asset you could put up as collateral but only a positive cash flow, a merchant cash advance (MCA) can provide you with the needed funds to keep your business functioning smoothly. Here we tell you all about this form of borrowing.

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A Business Owner's Guide To Merchant Cash Advance

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  1. A Business Owner's Guide To Merchant Cash Advance

  2. A Merchant Cash Advance (MCA) Is Not Exactly A Loan. It Is Upfront Capital Given In Return For A Percentage Of The Business's Daily Credit And Debit Card Sales Volume.

  3. Terms In MCA

  4. • ACH: This Percentage Is Paid From The Owners’ Business Bank Account Through ACH (Automated Clearing House) Withdrawals.

  5. • Factor Rate: An Mca Does Not Have A Fixed Monthly Payment As It Is Based On A Factor Rate And Not Interest Rate.

  6. • Retrieval Rate: It Is The Percentage Of Daily Receipts That Is Used To Repay The Advance.

  7. Difference between MCA and Business Loan

  8. Features of Merchant Cash Advance

  9. Pros • High-borrowing Limits: A Advance Can Range From 50% To 250% Of Your Business’s Credit Card Transactions. • Flexible Repayment: Repayments Depend On Your Business’s Daily Credit/Debit Card Receipts. • Lesser Weightage Of Credit History: Lenders Are Only Concerned About Operational History, Minimum Monthly Transactions, Positive Cash Flow, And Business Owners’ Experience.

  10. • Quick Application Process: MCA Requires Less Paperwork And Has Easier Eligibility Criteria. The Funds Are Disbursed Sooner, Sometimes Within A Day. • Negotiable Terms: Businesses Can Take A Top-up In The Midst Of The Repayment Process If More Capital Funding Is Required. • Collateral-free: You Don’t Have To Propose Any Collateral To Receive MCA. • No Charges For Pre-closure: There Are No Penalties For Early Closure Of The Loan.

  11. Cons • No Impact On Credit Score: Merchant Cash Advance Providers Do Not Report To Credit Bureaus. • High Interest Rate: The Interest Charged For An MCA Is Much Higher Than Other Traditional Loans.

  12. 3. Facility For Line Of Credit: This Benefit Enables The Owner To Withdraw The Amount According To Their Needs And Pay The Interest On The Amount Withdrawn.

  13. 4. Ownership Is Preserved: Working Capital Loans Don’t Require You To Part With Any Ownership Rights.

  14. How To Qualify For A Working Capital Loan? • The Applicant Should Be Running The Business For At Least 3 Years. • The Business Must Prove Its Profitability As Per Industry Norms. • The Applicant Needs To Submit Audited Financial Statements Of The Last Three Years, Necessary Licenses, And The Profiles And Kyc Of Directors And Partners In The Company.

  15. If Your Financial Need Is Quite Pressing And You Don’t Have Any Collateral Other Than The Cash Flow Of Your Business, Opting For An MCA Is Wise.

  16. Thank You !Would Love to Hear From You Hero FinCorp Limited 09, BasantLok, Vasant Vihar, New Delhi - 110057 Tel. 18001024145 Email Id: corporate.care@herofincorp.com Website: https://www.herofincorp.com/ Know more about- A Business Owner's Guide To Merchant Cash Advance

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