Sometimes a business just needs to raise cash fast, and we all know how prickly the banks can be. A Merchant Cash Advance can be a welcome solution, because it allows cash loans based on the business’ future credit card and debit card sales. Typically, a business can borrow up to the average of one month’s credit and debit cards sales, to be repaid with 10% to 20% of future receipts until the principal and fees have been recouped.

Merchant Cash Advances are  a simple a way to raise quick cash by paying a percentage of daily credit and debit card revenue until the advance and fees are paid in full. Advances are not traditional loans, but rather a “sale” of a portion of future sales. Although these advances can be more expensive than traditional loans, the repayment amounts are generally tied to a merchant’s sales volume, allowing for greater flexibility in managing cash flow, especially during slow periods.

Advances are also processed faster than traditional loans, and therefore allow quicker access to capital. Also, more attention is usually paid to a business’ performance than the owner’s personal credit scores, and so Merchant Cash Advances can be an attractive alternative for companies that may not qualify for conventional loans. Once a banking underwriter approves the cash advance loan amount, funds are made available and transferred to the company’s designated account. Considered  “unsecured loans,” typically these advances are collateralized by future sales and not by traditional forms of collateral or securitization. To qualify, most merchants will be required to demonstrate a consistent amount of business in which a few thousand dollars or more are processed each month, and have been operating for at least one year or longer, depending on the nature of the company. Fees and charges are transparent.

Most businesses will never need to take advantage of the line of credit, but if qualified, Merchant Cash Advances can be a lifesaver for most any business.

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