If you’re a small-business owner in need of capital now a merchant cash advance may be the fastest way to get the capital that you need for your expenses.

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One of the reason why many small business owners decide to use merchant cash advances to cover the cost of business expenses is because the submission process is easy and the funding happens in days, and in some cases hours. A merchant cash advance is like grease lightening in the business credit world. Small business owners that accept credit cards as a form of payment are able to access the capital they need in order to make payroll, make an emergency equipment purchase or even hire new employees. A merchant cash advance can be used for any business purpose, which also makes it very popular.


Another reason a lot of small businesses seek out merchant cash advances is because they are unsecured. The company’s merchant processing statements are used to show that the merchant brings in enough revenue to cover the cost of the capital they need. This keeps the cash advance from becoming too expensive for the merchant as the lender will only lend 8-12% of the merchants actual revenue. You will not lose your home or other personal assets should you not repay. This is where the lender’s risk is highest and must be balanced by the cost of capital. 


Having a credit score of less than 650 will get you denied by every traditional lender and even non-bank lenders like OnDeck and Kabbage. Merchant cash advances are a good option in these situations.


If you take a merchant cash advance, you’ll be glad to know that the repayment never comes out of your business bank account. Each time your customer use their credit or debit card to pay for your goods and/or services, a very small amount is deducted and used to repay the debt. This makes repayment extremely manageable as repayment is never taken on the weekend or holidays when the banks are closed.


If your dealing with a reputable company, then each time you take capital they will charge you less as long as you repay without delays. Dealing with the cost of this type of finance is usually where would be borrowers deny themselves the opportunity to grow. 

If you think of a cash advance like a regular business loan, then you’re thinking of it incorrectly. A merchant cash advance is not a business loan…it is in fact and advance against future revenues. There is no interest rate. The charge you’ll be paying back is already built into the repayment structure.

For example, if you borrow $10,000 you would payback $4,000 + $10,000, or $14,000. Remember, this is an unsecured cash advance against future revenues. There’s no guarantee to the lender that you won’t go belly up and close shop before the debt is repaid. The high cost is how they handle their risk.

This type of finance is not for the “traditional lending” mindset…it is an “outside-of-the-box” type of option that has worked for many businesses in the United States and abroad.


About the author


Deirdre Porter MBA

Is a small business finance consultant with over 10 years of experience in the alternative finance industry. Her work has helped small business owners acquire the capital they need to pay business expenses and continue their positive growth trends.