Benefits of a Merchant Cash Advance for Small Business
As you seek out new financial solutions for your business, you’re wondering about merchant cash advances. What is an MCA, and what can it do for your small business?
As it turns out, a merchant cash advance has serious benefits for small businesses. Check out these advantages, and you might be convinced that an MCA is the right move for you.
Funding Based on Your Future, Not Your Past
One of the biggest benefits of a merchant cash advance is that your future is more important than your past. With a traditional bank loan, you must provide your business’s past income and revenue. They’ll also want to see the business’s credit score and maybe your personal credit score.
A merchant cash advance, however, is extended on the basis of anticipated future sales. The lender examines your past credit card and debit card sales to make an estimate about what you’ll earn in the future. They offer the advance based on what you’re likely to bring in.
That’s great news for small businesses without a lot of history under their belt. Plus, since it’s forward-looking, it takes into consideration that your business is growing. That’s much better than a traditional loan that looks at your past and doesn’t consider your future needs.
You Can Use It for What You Need
A merchant cash advance offers more flexibility to a small business. Some traditional loans will earmark your funds for particular business uses. An equipment loan, for example, needs to be used to buy equipment. A payroll loan must fund payroll.
An MCA can be applied to either of these expenses. Since the funds aren’t earmarked, you could use the MCA to help with payroll. Then you could take any leftover funds and put them towards that equipment.
You can even use the MCA to help with day-to-day operations. Need petty cash? The MCA’s funds could stock it up. What about keeping the lights on? The MCA could help you with the electricity bill too.
This gives small business owners greater freedom and flexibility than other traditional loan products.
A Merchant Cash Advance Offers More Payment Flexibility
Perhaps the biggest benefit is that the MCA gives small businesses more flexibility when repaying the advance.
With a traditional loan, you’ll have a set monthly payment. If you experience a poor sales month, then you might only be able to make a partial payment. You might default on the loan or require another loan to pay it back.
The MCA is different. The lender takes a percentage of your actual credit card sales as payment. When you have a good month, you can pay your MCA back faster. If you hit rough waters, then the payment decreases accordingly. You don’t need to worry about defaulting on the payments.
Discover the Benefits of an MCA for Your Business
These benefits can make a merchant cash advance the right choice for many businesses, but they’re especially helpful for small business owners.
Ready to see what an MCA could do for your business? Get in touch with the experts to get the funds you need today.