Merchant Cash Advance

A merchant cash advance for a small business opens the door to new growth opportunities. Merchant cash advances allow you to buy more inventory, launch product lines, and expand to new markets. A business cash advance also makes it easier to get more materials for an unexpected opportunity or deal with unforeseen expenses.

QUICK FACTS AND REQUIREMENTS

Advance Amount

$5,000-$500,000

Factor Rates

Starting at 1.08x 

Repayment

3-24 Months

Payment Frequency

Fixed or Variable

Z

Minimum Qualifications

  1. 3 months in business
  2. Min. $120k annual sales
  3. 500+ FICO
  4. Any industry

Benefits & Drawbacks

Easiest qualifying form of financing
Use of funds are unrestricted
Fits all business types and industries
Zero Collateral Required
Funding all credit scores

Higher finance costs

What is a Merchant Cash Advance

A merchant cash advance (MCA) is not a loan but is a purchase agreement. The merchant (“seller”) is selling their future revenue at a discount to the merchant cash advance company (“buyer”).

Merchant cash advances diverge from traditional loans in a few technical ways. For instance, there is no interest rate as cash advance providers charge a one-time premium, calculated by multiplying a “factor rate” by the borrowing amount.

As part of the purchase agreement, MCA providers offer multiple ways to collect their money, traditionally it is usually a percentage of your credit and debit card sales or on a fixed payment plan.

How Does a Cash Advance Work?

A cash advance means you receive funding upfront, and the lending entity gets the purchase of future receivables. The advance amount may be anywhere from $5,000-$500,000 and can carry a reasonable factor rate.

For example, a factor rate of 1.15 at an approval amount of $10,000 the merchant cash advance provider will collect $11,500 ($10,000 x 1.15). Put simply, the fee is 15% of the borrowed amount. The initial funding may be available in as little as 24 hours, so businesses can quickly adapt to their changing needs. 

Benefits of a Merchant Cash Advance

The most significant benefit of a cash advance is that you can get your money exactly when you need it. Beyond that, there are three key advantages to choosing a merchant cash advance:

  1. They are one of the easiest types of financing to qualify for. You can get a merchant cash advance with bad credit so this is a good option for businesses that have been denied for other traditional loans. 

2. You can use the funds however you want. Merchant cash advance companies understand that you know your business better than anyone, so they let you decide how to use your money. Other types of loans might restrict how you can use the funding.

3. You do not need to use collateral to get a cash advance. Other loan types require that you put up some collateral. This could be your retirement savings, your personal property, or even your business itself. Later, banks can claim that they’re entitled to your property if there is any problem with the loan. With cash advances, there are no such worries.

Are There Different Types of Merchant Cash Advances?

There are a couple of common types of cash advances, which gives business owners a lot more flexibility in repayment. Businesses can choose the kind of advance that best suits their needs. The two main types are as follows:

  1. ACH Advance – ACH Advances can be fixed or variable, depending on the agreement and MCA provider. If the withdrawals are fixed, the provider will simply deduct the same amount of money each payment period. With variable ACH Advances your cash advance provider may periodically adjust your payments if you experience a decline in sales. If in doubt, ask your MCA provider their policy on payment adjustments before entering into an agreement with a fixed ACH payment.

2. Credit Card SplitThis type of collection uses credit card processing reports only to determine the health of a business. Typically an agreed purchase percentage in the agreement stipulates that for every qualified credit or debit transaction processed, the purchase percentage will be applied. For example, if $100 is transacted and the purchase percentage is 15%, then $15 of the $100 will be collected by the MCA provider directly from the credit card processor. This option is great for businesses that rely heavily on credit or debit card sales and wish to monetize their sales trends without worrying about fixed payments.

Can I Qualify for a Merchant Cash Advance?

This is a non-traditional type of financing which was created as an innovative way to meet business needs. They are relatively easy to qualify for, mainly because you can get a cash advance with bad credit; the unrestricted nature of these advances and the lack of required collateral means that any business can qualify. The critical requirement has to do with a business’ current cash flow. As long as the company is bringing in enough money, advance funding should be available.

A lender may also want to see an active business checking account, and some general financial information. Small business owners should be willing to provide answers about how long they have been operating and what kind of revenue they achieve.

How Can I Get a Merchant Cash Advance?

Since your repayment is a factor of how much you borrow, it’s important to think about how much of your advance you can use right away. It’s also important to find a trustworthy MCA provider who is willing to negotiate when it comes to fees. AMP Advance is an extremely flexible alternative funder who will cater to your needs and provide the best deal possible. Apply today to see if your small business can qualify.

Testimonial

You guys are doing a great job, keep it up! My monthly revenues have been on a consistent upward trend and we are up 20% from this point last year because of Amp Advance! Crazy right? We went from owning 3 ambulances and now 6 months later we are up to 9. When told they would increase my business, 10 times over, I was extremely skeptical. 6 months later I can proudly say they do what they say and they are more efficient than any other company we have ever worked with. Charles, Virginia

Thank you, Amp Advance! I wasn’t approved for traditional financing anywhere. They were extremely professional and helped give me the chance to pay off existing debts and have just just one low monthly payment! Cynthia, California

Even though we have great cash flow, our business showed a loss on paper after this most recent year. Traditionally, because of this I have been turned down everywhere I have gone. Amp Advance helped us when we thought there was no one else to provide us financing. Carlos, Miami

The process of any type of financing is extremely tedious and time consuming. The team at Amp Advance makes the process of financing quick, seamless, and pain free! Funds appeared in my account in a little more than 72 hours too, which was quite to my surprise. Dave, Illinois

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