Thinking about getting a Merchant Cash Advance (MCA) for your small business or startup? As an alternative to traditional bank loans, MCAs are an option that many small businesses utilize to access quick capital. However, it is important to understand both the benefits and drawbacks of such an option before deciding on whether to use an MCA or not. Let’s explore 10 distinct benefits of MCAs to help you make an educated decision.

Key Takeaways

• MCAs provide a lump sum of cash in exchange for a percentage of future sales, repaid through daily credit card receipts.
• MCAs are accessible for businesses with poor credit or a short operating history, focusing on sales performance rather than credit scores.
• Businesses can repay the advance early without penalties, offering flexibility in financial management.

What is an MCA?

A Merchant Cash Advance (MCA) is a financing option where businesses receive a lump sum of cash in exchange for a percentage of future sales. Unlike traditional loans, MCAs are repaid through a portion of daily credit card receipts, making them a flexible and convenient funding option for many businesses.

10 Benefits of MCAs for Businesses Looking for Funding

Now that you know more about what an MCA is and how it works, let’s take a look at the benefits that make MCAs stand apart from other loan options.

1. Quick and Easy Application Process

Did you know that you can complete an online application for an MCA in under 10 minutes? Compare that to a traditional loan that can take hours to fill out and days to hear any response. Plus, you can get preapproval in seconds. This ease of application allows businesses to apply and receive approval without the extensive paperwork and time-consuming procedures associated with traditional loans. Typically, business owners need to provide basic information about their business and recent sales history. This simplicity makes it an attractive option for those who need funds quickly and cannot afford to spend weeks gathering documents and waiting for approval.

2. Lenient Qualification Criteria

MCAs have more lenient qualification requirements compared to traditional bank loans. Businesses with poor credit or a short operating history can still qualify for an MCA, making it an accessible option for many small businesses. Unlike traditional lenders, MCA providers focus more on the business’s daily credit card receipts and overall sales performance rather than its credit score. Generally, you need to have been in business for about 6 months and have about $8,000 or more in monthly credit sales.

3. No Use Restrictions

Unlike some traditional loans that impose strict usage guidelines, MCAs come with no restrictions on how the funds can be used. This flexibility allows business owners to allocate the funds wherever they see fit, whether for inventory, marketing, or other operational needs. Whether you need to cover payroll, purchase new equipment, or manage unexpected expenses, an MCA gives you the freedom to use the funds in the most effective way for your business.

4. Fast Access to Funds

Once you have been approved, funds are typically issued to your account in 1-3 days. This quick turnaround is particularly beneficial for businesses facing urgent expenses or those that need to take advantage of a timely opportunity. Additionally, since you have no usage restrictions, you get peace of mind knowing that the money to handle emergencies is always a quick application away.

5. Doesn’t Require Collateral

MCAs are unsecured, meaning business owners are not required to put up personal or business assets as collateral. This reduces the risk for business owners and makes MCAs a less stressful funding option. Without the need for collateral, business owners do not have to worry about losing valuable assets if they encounter difficulties in repaying the advance.

6. No Detailed Business Plans

Many traditional loans want to see a business plan that fully discusses your business, the funding you need, and how you plan on using that funding. With MCAs, lenders focus more on current and projected sales, eliminating the need for extensive planning and documentation. This makes the process quicker and more accessible for business owners who may not have the time or resources to develop comprehensive business plans.

7. Bridge Cash Flow Caps

Do you find yourself experiencing cash flow gaps where you need to spend more money than your receive? A Merchant Cash Advance provides the necessary capital to maintain operations, pay employees, or invest in growth opportunities during periods of fluctuating revenue. By smoothing out these cash flow inconsistencies, businesses can operate more effectively and avoid disruptions.

8. Ideal for Seasonal Businesses

Seasonal businesses with inconsistent cash flows can greatly benefit from MCAs. The repayment structure, tied to daily sales, aligns well with the fluctuating revenue patterns of seasonal businesses. This means that during peak seasons, repayments increase, and during slower periods, repayments decrease, making it easier for seasonal businesses to manage their finances.

9. No Early Repayment Penalties

MCAs do not impose penalties for early repayment. Businesses can repay the advance as quickly as their cash flow allows without incurring additional fees, offering flexibility in managing their finances. This flexibility can be particularly advantageous for businesses that experience a sudden influx of revenue and wish to pay off their advance sooner than anticipated.

10. Not Reported to Credit Agencies

Worried about your credit score? The good news with MCAs is that they are not typically reported to credit agencies, meaning they do not impact a business’s credit score. This can be beneficial for businesses looking to secure additional financing without affecting their credit profile. Since MCAs do not appear on credit reports, businesses can maintain their credit standing while still accessing the funds they need.

Looking for an MCA? Contact NBMC Today!

Merchant Cash Advances are a beneficial option for many businesses in a variety of industries. With fewer requirements to be approved and more flexible terms, a cash advance can help your business succeed and overcome obstacles. If you’re a business owner in need of fast and flexible financing, consider applying for a Merchant Cash Advance with New Bridge Merchant Capital. Our team specializes in providing tailored financial solutions to meet your unique needs. Contact us today to explore your options and secure the capital your business deserves. Call us at 844-228-0593 or fill out the online form to receive more information.