Merchant Cash Advance

Merchant Cash Advances (MCA) is a great way to access your small business’s working capital without sacrificing your cash flow or financial security.

Despite that, many typical merchant cash advance myths swirl in the business and financial communities that may prohibit small businesses from leveraging valuable financial resources. Here is a rundown of eight common merchant cash advance myths, along with the merchant cash advance facts that deflate them:

Myth 1: Merchant cash advances are the same as the loan 

It is not true that Merchant cash advances are loans. In a traditional loan, you lent money, and you have to pay it back over a fixed time, with a fixed payment schedule.

However, a merchant cash advance is an advancement of funds based on your future credit card receivables.

The repayment depends on the daily credit card/sales volume brought into the business. An agreed-upon percentage of the daily sales is taken directly out of the business bank account to pay the merchant cash advance funder.

Myth 2: Merchant cash advances offer high-interest rates

 

Merchant cash advance direct lenders

 

An approved merchant cash advance’s terms and conditions are based on your business’s sales volume, projected future sales, and your provider. However, Funderama’s merchant financing through MCA loan rates may be a minimum of 1.25 percent a month.

Myth 3: Years of sales history is a must

At Funderama, potential clients need to have a credit score minimum of 500. Also, they need to have been in business for a minimum of 12 months

Additionally, they must have documented monthly gross sales volume of at least $10,000 based on total receipts. From sources including cash, credit cards, debit cards, and cheque.

Myth 4: It is compulsory to have new payment equipment

Most of Funderama’s clients find that their existing point-of-sale terminals work seamlessly with their MCA after reprogramming the terminal. The transition process only requires a 10-minute phone call with our IT department. You will receive step-by-step instructions on how to go about the process.

Myth 5: You have access to only one merchant cash advance provider

Funderama clients who have an outstanding merchant cash advance with another provider can also use their Funderama LLC MCA to pay it off and potentially access additional funds.

Myth 6: You have access to only one merchant cash advance for specific needs

Merchant cash advances give businesses flexible access to funds. You can use your merchant financing plan to purchase new equipment, improve your business facilities, buy inventory, pay your employees — or any other number of capital needs.

Myth 7: A bank loan is always a better option

Traditional loans can be a wise funding choice for a few businesses, but they are not the best solution for all. In addition to stringent application requirements, it can take several weeks. For a traditional lender to review a loan application and make a funding decision. Funds from MCA loans are electronically accessible in just a few business days.

Myth 8: Collateral is a must to get a merchant cash advance

Collateral is rarely ever required for merchant cash advances. If you have a good history of credit card sales/receivables, you do not need any collateral. Some funders will use real estate as collateral for the advance. When the dollar amount of advance is more than a million dollars, it is noticeable. Also, you need to show at least $10,000 in gross sales every month on your business bank statements to qualify.

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