What You Need Before Applying for Merchant Cash Advance

For small business owners looking to increase their cash flow, the first thought that crosses their minds is usually, “I need to find a loan.” Loans are certainly a great way to get your business the money you need, but they’re not the only way to increase the money you have at your disposal. In fact, a merchant cash advance (MCA) can offer more flexibility and easier qualification requirements. However, getting the best MCA possible is different than applying for a loan. Here’s what you need to get the best deal possible.

You’ll Need Proof of Your Current Profits

MCAs leverage your future sales and profits rather than your business’s overall financial strength or profit history. This means you’re able to borrow money even if you’re relatively new to the industry. However, you will need to provide proof of your current sales and estimated future sales to qualify. Your best bet is to speak with your accountant or bookkeeper and gather those documents as soon as possible.

You’ll Need To Know How You’ll Pay It Back

Like any loan, your MCA lender will expect you to pay the advance back in full. Unlike small business loans, MCAs allow you to pay the loan back with a set percentage of your future sales every week or month. This exact amount will vary based on how much money you bring in. If you have a slow week, your payments will be smaller. If you have a profitable week, your payments will be larger. Make sure you’re okay with the pay structure before you accept the money. The variable payments can make it harder to budget each month.

You’ll Want To Shop Around

Different MCA lenders will offer different rates and terms. This means you’ll want to shop around for lenders before you accept an advance. Try to get quotes from at least three companies and compare the interest they charge, the amount they’re willing to offer and the percentage of your future sales they’ll take in payment. If you’re not happy with the terms you receive, you’ll either need to look for a different lender or a different financing method. As a general rule, try to partner with the lender that offers you the lowest interest rate and the fairest repayment terms.

A merchant cash advance offers you a flexible way to finance your business without having to take out a traditional loan. Make sure you take care of these key things before you accept the money and you’ll be sure to get the best advance possible.


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