merchant cash advance loan 2023 Latest news for Lenders and brokers!

What is Merchant Cash Advance loan?

With a merchant cash advance loan , a financing company advances you capital in exchange for a percentage of your daily credit card sales, plus a fee. Merchant cash advances can be quick, easy ways to get a business cash advance loan with no need for collateral—even if you don’t have a great credit score.

merchant cash advance loan

Who Qualifies for Merchant Cash Advance loan?

Would your business be eligible for a merchant cash advance loan? If you have little or no collateral, limited business history, or a low credit rating, merchant cash advances could be a solution to your financing problems. Merchant cash advance providers tend to have easy eligibility standards, so most small businesses shouldn’t have a problem qualifying.


For businesses that make a big portion of their revenue through credit card payments—if you own a restaurant or a retail store, for example—then you can use a merchant cash advance as a short-term financing tool. It can help with working capital, inventory purchases, debt payments, unexpected payments, and more loan option .

How to Apply for merchant cash advance loan?

Applying to a merchant cash advance loan is a fast and easy process. Because merchant cash advances are paid back with your daily credit card sales, MCA companies will look at your credit card processing statements to make sure you have enough volume coming into the business. Some merchant cash advance companies will ask for your credit score and bank statements, too. Merchant cash advance applications are almost always online, and applications can be approved the same day you apply. Remember: fast cash is expensive cash, and an MCA is no exception. A merchant cash advance application is fast and easy, but MCAs come with the highest cost of capital on the market.

       Documents you need:
  • Driver’s License
  • Voided Business Check
  • Bank Statements
  • Credit Score
  • Business Tax Returns
  • Credit Card Processing Statements

How Does a Merchant Cash Advance Loan Work?

Every business could use some extra capital. But applying for loan takes time and energy that you might not have. Plus, even after you send out an application, there’s a chance you don’t even qualify. we pride ourselves, on having a marketplace that can help out all different sorts of business owners. If you don’t have the time to wait for a typical loan or wouldn’t qualify, a merchant cash advance might be for you.

What Will a Merchant Cash Advance loan Cost?

We’ve said it over and over: A merchant cash advance can be very expensive loan . And based on the structure, taking on an MCA can really take a chunk out of your cash flow. But let’s look at how you can calculate, the actual cost of a merchant cash advance.

A Cost Example of Merchant Cash Advance loan
Say you’re advanced $20K with a factor rate of 1.18.

$20K multiplied by 1.18 is $23,600, which is what you’ll need repay with your daily credit card transactions. At first glance, that might seem like you’re just paying a 18% interest rate—but looks can be deceiving. You have to determine the true cost of the merchant cash advance by its APR. If your lender will be taking 15% of your future credit card sales and you’re estimating $25K a month in credit card transactions, you’d repay that advance in 189 days with daily payments of $125.

That’s an APR of 65.96%—quite a bit higher than it originally looked.

Merchant Cash Advance loan: The Fundamentals
How would you like a cash advance—approved and funded in just a day or two—with almost no paperwork involved? That’s what a merchant cash advance is, with one caveat:

In return for that lump sum advance, you agree to pay the lender back with a percentage of your daily credit card sales. While a merchant cash advance is definitely one of the faster financing options out there, it is the most expensive loan on the market.

Merchant Cash Advance loan & Factor Rates
Merchant cash advance providers measure their fees with a factor rate instead of an interest rate.

Ranging from 1.14 to 1.48 typically, a factor rate is what you multiply your loan amount by to figure out the total you’ll owe. Converted to APR, these rates often start at 15% but can get all the way up to triple digits.

Merchant cash advance can get so expensive for a few different reasons. The most important reason is that merchant cash advances tend to work for riskier borrowers—those with lower credit scores or those with newer businesses. And riskier lending options correlate with higher rates and fees.

How Long Will It Take To Pay Off a Merchant Cash Advance loan?
The average repayment time frame for a merchant cash advance is 8 or 9 months.

But the term can be as short as 4 months and as long as 18, depending on your business And the higher the fixed percentage of your credit card sales you’re paying the lender with, the shorter your repayment time—and the tighter your cash flow.

Is a Merchant Cash Advance loan Is Worth It?
How do you know whether a merchant cash advance will make sense?

On the one hand, paying off a loan with daily credit card sales can bite into your cash flow more than you might expect. On the other, you’ll actually repay a smaller amount of money during slower weeks and months—unlike with a term loan, where you’ll either make your payments on time or suffer the late fees.

In the end?It’s up to you to understand your business’s financials. Just remember that a merchant cash advance is the most expensive financing option you could pick.

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When is the Cost Worth It?
Merchant cash advances, while fast and convenient, tend to be worth their price only if you’re confident you can repay them quickly and without much harm done to your cash flow.

Just be sure, to shop around and see if you can qualify for other types of loans, before moving forward with a merchant cash advance.

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