Benefits of Using Merchant Advance Capital for Your Business

“Marcus’ auto shop had established seven years of steady business when a tremendous opportunity arose: the building next door came on the market, providing double the space and two additional bays for servicing vehicles. This threatened to put his shop on the map not only with the local community but with the big franchises.”

However, there was a down payment of $80,000 required for the lease, equipment, and renovations. This was a problem because the bank called for a “proposal study” in 45 days, during which time the lease would probably be acquired already by another interested party. This left merchant advance capital as the only choice for Marcus. Access to funds occurred within 72 hours, and he saw his profits soar 150 percent in the first six months. It did not take him a year to pay for the expansion, and he has not looked back since.

“This is not a fable. Instead, it is a reality of thousands of entrepreneurs who know that merchant cash advances provide a benefit over other forms of financing. The following reasons are why this funding source is the secret weapon used by ambitious entrepreneurs who do not miss opportunities.”

Speed That Turns Opportunity Into Reality

• Timing is everything in the world of business. The right location becomes an option. A competitor goes under and makes market share available. A supplier offers a limited-time discount for bulk purchases. A viral marketing opportunity showers you with requests you have to fill immediately.
• In the traditional sector, the time taken to process a bank loan is longer and may take at least four to eight weeks prior to actual fund disbursement. The merchant advances capital releases quickly: the time taken from the submission to cash receipt ranges between 24 to 72 hours. It’s not only quick cash; it’s leverage too. Your time will come; you have the capital to leverage the opportunity not next week or the week after.

Approval Rather Than Experience

Banks evaluate your past. Merchant advance capital evaluates your present.

• Conventional lenders look for years’ worth of tax returns, financials, impeccable credit, and long-term business plans. These lenders are risk-averse, looking to the past for what they do. MCA lenders care about only one thing: how much credit card sales are you processing now? If you are processing $30,000, $50,000, or $100,000 a month in credit card sales now, that’s all the qualification you need. Some past performance beats credit or your 2022 tax return any day.
• Performance-based lending helps existing businesses with non-traditional viability criteria qualify. Performance-based lending helps new businesses with little or no viability track record. Performance-based lending helps businesses that are recovering from difficulties. Performance-based lending helps new businesses in risky industries.

Flexibility in Repayment Terms to Support Cash Flow Management

This is where brilliance begins, because payments are tied to your revenue streams.

• Conventional loans require a fixed payment each month, say $3,500, irrespective of how the month has fared. Such inflexibility can strangle cash flow, forcing priorities between loan payments and operational needs.
• With MCA, the payments are a percentage of the day's credit card sales. Good day? You owe more. Bad day? You owe less. The payments are directly proportional to your income, giving you automatic ‘breathing space' during lean periods.
• This is noticeable, especially in seasonal enterprises. A resort for downhill skiing can make a strong push during prime season, then Coast through summer. A tax preparation concern can coast through summer, then make a strong push during tax season.

No Collateral, No Personal Asset Risk

There is zero collateral requirement. There is zero personal asset risk

They adore collateral such as equipment, real estate, inventory, and even personal assets. In case things don’t go well, they can take back your home, car, or even your savings.

The capital given to merchants is unsecured, based on future receivables to be collected by the firm. No liens on property and/or personal effects. The lender wagers on sales performance and not on personal financial resources.

With this, there is no need to mortgage all that you have when it comes to business performance. It removes the fear

Use Funds However Your Business Needs

• The banks dictate where the money can and cannot go. They lend for one purpose and deny for another. The banks are risk managers; that is, not growth collaborators.
• There are no usage restrictions when it comes to MCA. Need inventory? Perfect. Capitalize tech? Yes. Go out with a marketing campaign? Yes. Bridge gap sales? Of course. Renovate, hire people, buy cars, or invest in any combination of growth initiatives? It’s your money, so use it wherever your business requires the focus to be.
• This agility enables you to quickly adapt to shifting circumstances and opportunistic situations, as compared to being tied down by choices already made in a remote application process.

Easy Application Process, Little Paperwork

The process for traditional loans feels like an IRS audit, a bunch of forms, lots of paperwork, and questioning about everything related to finances.

The processes for Merchant Cash Advance are simplified and are mostly done online. They are also short, requiring only 10 to 20 minutes. The requirements are minimal, such as bank statements, processing statements, and business details. Some providers connect directly to your payment processor.

Establish Business Credit For the Future

Paying off an MCA proves credit-worthiness and enhances business credit profiles. It is a bridge loan towards more conventional lending, at lower rates when a lending history is developed that banks find attractive. Sometimes, companies will use the first MCA to finance growth, and in doing so, they establish the necessary revenue history and stability that opens the door for improved funding opportunities. This is not funding for the present moment, but rather the foundation for greater funding opportunities in the future. 

Expand Your Growth Plans 

Ultimately, the greatest advantage offered by merchant cash advances is their ability to facilitate growth that would otherwise not occur. Another location to double your reach. Tech enhancement to amp up productivity. Buying inventory to catch the holiday tide. Marketing efforts to raise brand stature. Growth to foster an ever-expanding team. These are not fantasies, but actual results for companies that took advantage of such opportunities while having capital readily available. 

The Bottom Line

Merchant advance capital isn't an ideal tool for every business. It may be more expensive than traditional lending, with a daily holdback that requires sound cash flow management. However, when considering businesses with credit card revenue and time-sensitive business opportunities, the advantages are obvious: speed, flexibility, ease of use, simplicity, and growing your business on your schedule, not on a bank's schedule. In business, actions speak louder than words. With merchant advance funding, you’re never stuck on the sidelines when your time to shine has come.