Effective cash flow is vital for any business. As a small business owner, you want the venture to run at its best. When you have proper cash flow, achieving your objectives becomes easier. However, when you see more funds going out than coming in, it is time to look for alternative financing options to utilize. The availability of merchant cash advances provides alternatives. But why consider MCA for your business financial needs?

What is a Merchant Cash Advance?

Unlike other alternative financing options, a merchant cash advance provider converts the anticipated credit and debit card sales into the funds you need for your business, immediately. But since there are no banks, no set repayment period, and interest rates, cash advances are not loans. Instead, you exchange a specific percentage of sales over a scheduled period to a financing company that gives you the funds. You can utilize your business receivables to get an MCA.

Components of a Merchant Cash Advance

Cash Advance

The fund you request and receive upfront for your business needs is a cash advance.

Repayment Amount

The total amount you pay for the MCA is the repayment amount. However, there are no interest rates or specific repayment periods as cash advances are not loans. You should, however, expect additional costs and fees depending on the amount you requested and received. Before funding your business, the lender will outline the rates for repayment as per the cost of your cash advance.

Holdback Rate

Note the percentage of daily debit and credit card sales you use to pay back your cash advance of the holdback rate from the lender. However, note that despite the holdback rate, your total repayment amount doesn’t change, but your payments may vary daily as your sales volume fluctuates. You owe more or less depending on your sales trend.

Pros of Merchant Cash Advance

You Don’t Need Collateral

Understand that you won’t have to pledge your home or other assets as collateral with merchant cash advances. This means, despite your financial situation, you can benefit from this financing option.

Higher Approval Odds

Unlike other alternative financing options, you have higher approval odds if you try an MCA. As soon as the lender checks and ascertains your business age and the debit or credit card sales, you get the funds.

Utilizing MCA for your business’s financial needs becomes vital after proper guidance. Contact 18 Sierra Financial today and meet your goals.