November 29, 2021
4 Steps to Take When Applying for a Merchant Cash Advance
Merchant cash advances (MCA) are a viable business financing option that, contrary to traditional alternatives, are relatively easy to apply for.
To start, we should explain how merchant cash advances work. With a merchant cash advance, your business receives lump sum financing that can be used for whatever your needs are.
Typically, the amount of money you qualify for will be based off your business’ historical credit card sales volume. To repay the advance, the provider will take a percentage of your future credit card sales until you fulfill your obligations. Therefore, the product works in accordance with your business’s sales volume at that time. This is unlike small business loans or lines of credit, which come with set repayment terms.
If managed responsibly, merchant cash advances can be a useful source of business financing. In this post, we’ll explain how you can apply for a cash advance. That way, once you receive this funding, you'll have access to the additional cash flow that your business requires!
How to Complete a Merchant Cash Advance Application:
Step One: Research Cash Advance Providers
Prior to submitting a merchant funding application, you should compare different merchant cash advance companies. When comparing different companies, there are a few things you should consider. First, you should determine the cost of the advance and the factor rate. By knowing this information, you can determine the portion of your credit card sales that will be used for remittance. Conducting research is important because the differences between funders can make a major impact. In addition, if you don’t meet a provider’s minimum requirements, there won't be any reason to apply. If you know your application will be declined, you'll be better off researching other funding options instead.
Step Two: Work with an Approved Credit Card Processor
To secure a merchant cash advance, prospective providers will need to know that you’re able to fulfill your obligations. Because the payments are made automatically through your credit card processor, you should ensure that your credit card processor is approved. To keep your current credit card processor, you should ask them if they have a working relationship with merchant funding providers. However, many business owners prefer to select a business cash advance provider first. Once they select their provider, they can switch their credit card processor if needed.Step Three: Submit Your Cash Advance Application
One of the best things about cash advances is that the application is easier than a traditional bank loan’s application. If you have accurate and organized financial records, applying for a merchant cash advance is fairly straightforward. A merchant funding provider will need to review your business’ current financial situation, including:- Your total income
- Typical credit card transactions
- Projected future performances