What is a merchant cash advance and should my business get one?

merchant cash advance is funding based on the volume of your total credit card sales. Either your credit card processor or a third-party lender advances your business money, which the lender then takes from your future credit card sales as a percentage. 

Rather than borrowing money via a traditional loan, your business can borrow against its future by “repaying” the advance by way of automatic deductions from credit card sales. Because small and medium-sized businesses experience challenges securing capital, a cash advance is a solution to help sustain businesses, as well as to help businesses grow.

Cash Advance vs. Loan

Best Merchant Cash Advance Option

Unlike loans for which your business makes a monthly payment, a cash advance repayment is based on your credit card sales. Because a fixed percentage of your credit card sales are deducted daily, your payments depend on your sales. If you have lower sales, you’ll have a lower payment versus a predetermined loan payment due at the end of the month whether you had a lot of sales or not.

And because cash advances are not regulated in the same manner as traditional loans, your business will likely find it easier to qualify for a cash advance. If you’re looking to grow but don’t qualify for a traditional loan, a cash advance is a great option for your business. Cash advances don’t require collateral as loans sometimes do. 

While lenders set an amount of time within which a business repays a loan, there is no set time for a cash advance repayment. Cash advances are repaid in daily (weekly or monthly) payments as a percentage of your credit card sales until the advance is paid in full along with interest. Usually, it takes a business six to 12 months to repay the advance.

Speedy Funding

The biggest advantage of cash advances is the speed with which your business can access funds. Within days your lender can provide your cash advance. If you need capital quick, your lender can fund your cash advance in less than a week. Depending on your daily credit card sales, your business can qualify from $20,000 to several hundred thousand dollars in funding accessible in just days.

Lender Requirements

Small Business Cash Advance Options

While requirements may vary by lender, in general you will qualify for a merchant cash advance if your business has been in operation for at least a year, if your business processes a thousand dollars per month in credit card sales, and if your business needs at least $10,000 in funding. Check with your credit card processor for additional criteria, including a minimum amount of monthly credit card sales.

Host Merchant Services Cash Advance

Providing clients a speedy cash advance with little documentation, Host Merchant Services offers a merchant cash advance solution. Unlike a loan, your business’s cash advance has no restrictions on use. 90% of Host Merchant Services clients qualify for cash advances. Your business can partner with Host Merchant Services to access the best merchant cash advance now for an investment in your future.

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