2M7 Celebrates Canadian Entrepreneurs at the 2022 Small Business Summit

A Smarter Way for Canadian Small Businesses to Manage Cash Flow

‍

Running a small business in Canada is one of the most rewarding things a person can do. It is also one of the most financially demanding. You have likely experienced the particular tension of knowing your business is performing well on paper while watching your bank account tell a different story. A major client is 60 days past due. A seasonal lull has arrived ahead of schedule. A supplier is offering a bulk discount that expires before your next revenue cycle closes.

This is the cash gap, and it has nothing to do with how well you run your business. It is simply the reality of operating in an economy built on delayed payments, unpredictable demand, and tight margins. For restaurant owners managing weekend rushes and mid-week lulls, for contractors waiting on draws from general contractors, for retailers carrying seasonal inventory before sales materialize, this gap is not a sign of failure. It is a structural challenge that every business owner eventually confronts.

The question is not whether the gap will appear. The question is what tool you reach for when it does.

‍

Proactive Capital vs. Reactive Borrowing

There is a meaningful difference between borrowing out of desperation and borrowing as a deliberate business strategy. Most business owners have experienced the former: scrambling to cover payroll, negotiating with suppliers, or dipping into personal savings to keep operations moving. That kind of reactive borrowing is stressful, often expensive, and tends to happen at the worst possible time.

Proactive capital is different. It means having access to funds before the emergency arrives, using financing to take advantage of opportunities rather than to avoid collapse. It might look like purchasing inventory at a bulk discount, hiring a key employee ahead of a growth period, or bridging a gap between two large contracts so your team stays intact and your momentum stays strong.

This is where fast working capital becomes a genuine asset. When a business owner understands their financing options before they need them, they can move quickly and with confidence. They become the kind of operator who says yes to opportunity rather than the kind who watches it pass.

‍

How a Merchant Cash Advance Actually Works

Most introductions to merchant cash advances cover the basics: a lender provides a lump sum of capital, and repayment comes through a percentage of your daily credit and debit card sales. That structure is accurate, but it undersells one of the most important features of this product.

An MCA functions as a fluctuating safety net. Because repayments are tied directly to your daily sales volume, your payment obligations contract automatically when business slows down. During a quiet January, a restaurant remits less. During a slow construction season, a contractor's burden eases. When volume picks back up, repayments adjust accordingly. There is no fixed monthly payment sitting on your books demanding the same amount whether you had a record week or a difficult one.

This is fundamentally different from a term loan, where a fixed payment comes out regardless of how business is going. For industries with natural revenue cycles, that rigidity can be genuinely dangerous. The flexible structure of merchant cash advances removes that rigidity, replacing it with a repayment rhythm that breathes alongside your business.

The approval process is also designed with the realities of small business in mind. Where a traditional bank will scrutinize years of financial statements, credit scores, and collateral, an MCA provider focuses on your actual sales history. Your revenue tells the story that matters.

‍

Strategic Use Cases: When an MCA Makes the Most Sense

There are specific situations where a merchant cash advance is clearly the better tool compared to a conventional bank loan. Here are the scenarios where business owners consistently find it valuable:

• Seasonal inventory purchasing, where a retailer needs capital in October to stock for December but won't see revenue for six to eight weeks.
• Emergency equipment repair, when a piece of critical machinery fails and a multi-week bank approval process would mean lost contracts and idle staff.
• Bridging large contract gaps, particularly in construction and trades, where work is completed in one period but payment arrives weeks or months later.
• Capitalizing on a time-sensitive supplier discount that requires immediate payment and delivers significant long-term savings.
• Hiring and onboarding ahead of a known busy season, so the business is staffed and ready rather than scrambling mid-rush.

In each of these cases, speed and flexibility matter more than the cost comparison to a conventional loan. The opportunity cost of waiting is higher than the cost of the capital itself.

How Industry-Specific Businesses Use This Tool

In construction, the cash flow problem is almost universal. Materials need to be purchased, subcontractors need to be paid, and equipment needs to be maintained long before a draw schedule releases the next tranche of project funding. A merchant cash advance bridges that gap without requiring the collateral or credit profile that banks demand. Especially for construction companies, this kind of flexible capital is often the difference between taking on the next contract and turning it down.

In retail and food service, the challenges are different but equally real. Inventory decisions get made months in advance. Staffing ramps up before revenue does. A single slow season can destabilize months of careful planning. Having a capital partner who understands these cycles, and whose product is structured to accommodate them, changes how a business owner approaches their planning.

A Partnership Built for Resilience

2M7 is not simply a transaction. The goal is to function as a genuine partner in the financial health of your business, providing tools that help you maintain stability when the market becomes unpredictable and capture growth when the window opens.

Canadian small businesses deserve access to capital that was actually designed for the way they operate, not the way a spreadsheet imagines they operate. A merchant cash advance, used strategically and with clear intent, can be that tool.

Ready to Close Your Cash Gap?

If you are navigating a cash flow challenge or preparing for a growth opportunity and want to understand what funding might look like for your specific situation, the 2M7 team is ready to have that conversation. Reach out directly and speak with someone who understands the pressures you are managing.

‍

‍

· By Avi Bernstein, CEO, 2M7 Financial Solutions

Merchant cash advances aren't priced like bank financing, so their cost can be hard to compare. There's no annual interest rate. Instead, the funder applies a factor rate to the amount you receive to calculate the total repayment, and that total is set before you sign. The cost of capital is the total repayment minus the advance.

2M7 Financial Solutions is a Canadian direct funder of merchant cash advances. At 2M7, the cost of an advance is a fixed dollar amount agreed before you sign. Multiplying the advance by the factor rate gives the agreed total repayment, before any eligible early payoff discount. Factor rates at 2M7 typically fall between 1.18 and 1.48, so a $50,000 advance has an agreed total repayment between $59,000 and $74,000 and a cost of capital between $9,000 and $24,000.

The agreed cost does not grow while the advance is outstanding, and no interest accrues. The factor rate you're offered depends on the funding amount, how long the business has operated, its monthly revenue and its industry.

The repayment option you choose affects your daily cash flow, and an eligible early payoff can reduce the total cost. Both are covered below, with worked examples for a restaurant, a construction company and a retailer. All dollar amounts are in Canadian dollars.

‍

How do you calculate merchant cash advance costs?

Start with the amount you receive, the total you will repay and the payment coming out of your account. A factor rate is the multiplier used to calculate total repayment. Subtract the advance from that total to get the cost of capital.

Agreed total repayment = Advance × Factor rate

Cost of capital = Agreed total repayment − Advance

With fixed payments, the same amount is paid automatically each business day, and you can call 2M7 to ask about reducing it if revenue drops. Your offer states the payment amount.

With flex payments, the payment is a share of the revenue deposited into your business account each day.

Flex daily payment = Daily revenue × Holdback percentage

The holdback percentage at 2M7 typically ranges from 4% to 30%, depending on the funding amount, revenue and industry. The percentage stays the same and the dollar amount moves with your daily revenue.

‍

‍

What a $50,000 advance costs

On a $50,000 advance, a factor rate of 1.18 means $9,000 in cost of capital. At 1.48, that cost is $24,000.

Agreed totals are before any eligible early payoff discount. Your offer shows the exact factor rate and agreed total repayment in dollars before you accept it.

‍

Three worked examples

Illustrative examples, not offers. Factor rates and holdback percentages are within 2M7's published ranges, and agreed totals are before any eligible early payoff discount.

Restaurant. The owner replaces a range and a walk-in cooler. On a day with $3,000 in revenue, $300 goes to repayment. If a slow week drops revenue to $2,000 a day, the payment drops to $200 and repayment takes longer. Changes in sales do not change the agreed $65,000 total. An eligible early payoff can reduce it.

Construction company. A contractor has to buy materials weeks before the client's first progress payment. Revenue arrives in large, irregular deposits rather than steady daily income. This illustration uses fixed payments: the contractor pays the same amount automatically each business day and can call 2M7 to ask about reducing it if a client payment arrives late.

Retailer. A store stocks up in October for the holiday season. In December, daily revenue climbs to $5,000 and the payment rises to $400, so the advance is repaid faster during the busiest weeks. In a quiet January, the payment falls with revenue.

‍

Fixed or flex payments: the same advance two ways

Here is the restaurant's $50,000 advance at 1.30 under each option. For this illustration, both options use the same factor rate and the same agreed total repayment of $65,000, before any eligible early payoff discount.

With fixed payments, the daily amount is the same each business day, which some owners find easier to plan around. With flex payments, the dollar payment decreases when daily revenue falls and increases when it rises.

‍

Does paying early save money?

At 2M7, an eligible early payoff receives a 10% discount on the remaining balance when the account is in good standing and the payment comes directly from your business, not from another funder. Not every funder offers an early payoff discount, so when you compare offers, ask whether paying early changes the amount owed.

Take the restaurant again. It has repaid $40,000 of its $65,000 agreed total, leaving $25,000. An eligible early payoff earns $2,500 off, so the owner pays $22,500 instead. The advance's total cost drops from $15,000 to $12,500.

Ask your funding specialist for the payoff amount and the saving at your current balance.

‍

Factor rate vs APR

A factor rate is not an interest rate. It tells you the total repayment relative to the advance. It does not, by itself, tell you the annualized cost, which also depends on the timing and amounts of payments.

The same factor rate can represent different annualized costs depending on how quickly the advance is repaid, even when the dollar cost stays the same. With flex payments, repayment speed follows your sales.

When you compare offers, compare the agreed total repayment, the effect on daily cash flow and any savings available for an eligible early payoff. Ask for those figures in writing before you accept an offer.

‍

Does 2M7 charge fees beyond the factor rate?

Beyond the cost of capital, 2M7 charges no application, origination, underwriting, documentation, brokerage, servicing, maintenance, renewal or early repayment fees, and no collateral is required. 2M7 does charge a fee when a scheduled payment is returned.

Not every funder prices this way. When you compare offers, check the amount you will actually receive, the agreed total repayment and any separately stated charges.

‍

Frequently asked questions

What is a factor rate?

A factor rate is the multiplier used to calculate the total repayment of a merchant cash advance. Subtract the advance from that total to get the cost of capital. At 2M7, factor rates typically range from 1.18 to 1.48.

What is a holdback percentage?

With flex payments, the holdback is the share of the revenue deposited into your business account each day that goes toward repayment. At 2M7 it typically ranges from 4% to 30%. A 10% holdback on $3,000 in daily revenue is a $300 payment.

How much will I pay back on a $50,000 merchant cash advance?

At 2M7's typical factor rates, the agreed total repayment is between $59,000 and $74,000, before any eligible early payoff discount. Your offer states the exact total before you accept it.

Does a merchant cash advance cost more than a bank loan?

Usually, yes, for a business that qualifies for a bank loan. A merchant cash advance trades a higher cost for speed, repayment that can follow your sales, and an approval that weighs revenue alongside credit. Bank financing often takes longer and asks for more documentation. At 2M7, the cost is a fixed dollar amount agreed before you sign, no interest is charged and no collateral is required.

What are 2M7's minimum eligibility requirements?

2M7's minimum eligibility requirements are a Canadian business operating for at least 3 months, at least $15,000 a month in revenue and no open bankruptcies. Credit score is considered alongside revenue, so a low score does not automatically rule a business out. Meeting the minimums does not guarantee approval.

How quickly does the money arrive?

Approval decisions typically come within 1 business day, and funds are typically deposited within 24 hours of approval.

See what your advance would cost

Ask a 2M7 funding specialist for your factor rate, agreed total repayment, daily payment or holdback percentage, and early payoff conditions in writing before you accept an offer.

Check If I Qualify

If you are looking to grow your business, then you may find it challenging if you have poor credit. However, there are a number of options that can help your business get the financing with poor credit. Here’s a look at the steps you can take to secure fencing for your business with poor credit.

1) Check your credit score

The first thing that you should do is know your credit score. If your credit score is below 700, then your credit will be considered subprime. Also, this can prevent you from the top business financing options. You can credit your credit score for free on Credit Karma. You can also request one credit report, per year, from the two major credit reporting agencies.

• Experian to include a different link https://www.transunion.ca/
• Equifax - to include a different link https://www.consumer.equifax.ca/

2) Know your options

Once you know your credit score, then you can explore your options. In fact, if you have a low credit score, then you will want to consider the following types of financing options:

• Business credit cards - There are a number of business credit cards that allow customers with subprime credit scores. While these credit cards may have higher interest rates, they will allow your business to get the quick funding that you need.
• Merchant cash advance - A merchant cash advance is an advance based on the credit card sales deposited into your business’s bank accounts. In short, a merchant cash advance can help you get access to your money faster for a small fee. Many businesses used merchant cash advance to gain faster cash flow.
• Short-term line of credit - A short-term line of credit allows you to draw from a pool of funds. When you pay back the loan with interest, then you can draw from the line of credit again.

3) Create a business plan

If you are looking to secure a short-term business loan, it is a good idea to have a business plan. After all, the bank will want to know what type of business that you are in and how you intend to generate revenue. A well-organized business plan will increase your chances of being approved for a short-term business loan.

4) Have collateral

If you have any form of collateral, then you can secure a loan much more easily. Here are some types of collateral that can allow you to get the funds that your business needs:

• Vehicle
• Property
• Inventory
• Unpaid invoices
• Cash

5) Find a co-singer

Finally, you can find a co-signer that can help you secure a loan or financing with poor credit. A co-signer can be anyone from a member of the family to a business partner. The co-signer should be aware that they are liable for the loan if you don’t pay back the principal or the interest.

Getting your business up and running

Bad credit doesn’t have to stop you from funding your business. At 2M7 Financial Solutions, we do not require a credit score to issue a merchant cash advance. Apply now to get a merchant cash advance today.