Your Complete Guide to Merchant Cash Advances

A merchant cash advance can be an ideal funding option for businesses which typically have a high volume of credit card sales, and may have difficulty securing funding from other sources. Businesses in this category are quite often retail shops, restaurants, and similar establishments where debit and credit cards are frequently used to pay for purchases. One of the big advantages of using a merchant cash advance, is that it’s not really a loan, but really consists of your small business receiving an upfront sum of cash in return for some percentage of your credit card sales.

How it works

There are two primary options for a merchant credit cash advance, and in both of them your small business will get an upfront amount of cash to use for business purposes. Your financial partner in this transaction would either receive a percentage of future debit and credit card sales, or would be repaid by subtracting set amounts daily or weekly from your bank account. These are known in business circles as automated clearinghouse (ACH) withdrawals, and they are secure transactions which are routinely carried out in total safety.

Advantages of a merchant cash advance

Instead of having to pay a large monthly repayment amount, your small business would simply allow the lender to debit the company bank account for daily or weekly ACH transactions. This can be much more beneficial to your small business, since you don’t have another big payment to make every month.

Another big benefit of using a merchant cash advance is that it’s much easier to qualify for than going through a traditional bank. As long as you have a sufficiently high volume of credit card sales, this in itself serves as collateral to a lender, because it’s a kind of guarantee that those daily or weekly debits can be carried out, until full repayment has been achieved.

Another factor that works in your favor as a business owner is that the amount of any withdrawals made from your bank account is always tied to the percentage of your business sales, so if your business is down at some point, a smaller amount is debited from your account. It could be very harmful to your business if you had to make a set payment every month to repay your cash advance, even while your business was not generating a high level of revenue.

A merchant cash advance through Allegiant Commercial Experts

If yours is the kind of business where a merchant cash advance would work for you, we at Allegiant Commercial Experts may be able to help you to secure the funding you need for growth and for enhanced financial stability. Contact us today to discuss some options for coordinating a merchant cash advance for your small business.

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