Merchant cash providers often promise same-day approval and financing, but there’s always a catch and the risk of default if you don’t look before you leap. Whether you are considering same-day merchant cash advances or have already taken one, it takes an experienced merchant cash advance relief specialist to protect your interests.
At ReconcileMyMCA, we provide first-rate debt relief services to small businesses around the country. If you are struggling to meet the repayment terms of your merchant cash advance, we can help. Contact our office today by completing the convenient intake form.
What is a Same-Day Merchant Cash Advance?
A merchant cash advance (MCA) is a form of alternative funding that allows you to use your current sales volume to borrow money from an MCA provider. The application process is quicker than applying for traditional business loans. The advance may even happen on the same day.
Unlike a traditional bank loan, a same-day MCA gives you access to funds on an as-needed basis. MCA providers collect repayment of the advance through a percentage of your business’s daily sales or receivables, also known as a holdback.
So, there are no set repayment dates since your payments come from each transaction and depend on the cash flow of your business. However, funders typically expect repayment within 18 months. A same-day merchant cash advance is only a good option if you make the sales to repay the advance.
Common Uses for Same-Day Merchant Cash Advances
A merchant cash advance will provide your business with working capital for a variety of needs, such as:
- Purchasing inventory, supplies, and equipment
- Maintaining payroll or hiring new staff
- Expanding the business
- Marketing and advertising expenses
- Paying for unexpected business expenditures
In short, merchant cash advances are well-suited for startups and small businesses (e.g. restaurants, retail stores, auto-repair shops, salons, franchises) that are looking to grow.
How to Qualify for a Same-Day Merchant Cash Advance
The credit criteria for same-day merchant cash advances are not very stringent. Businesses qualify when their sales volume is $10,000 or more and have at least six months to 1 year of consistent sales history.
The application process is relatively straightforward and requires minimum documentation that shows you meet the sales and time in business criteria. Finally, revenue, average daily balances, and outstanding business debt will also factor into the qualification process.
Same-Day Merchant Cash Advance Fees, Costs, and Rates
Unlike traditional business loans, merchant cash advances do not have a set term. Setting established payments and end dates is not feasible because the process depends upon the number of daily sales your business processes (every transaction that goes through your credit card processor)
To determine your cash advance fee, multiply the “factor rate” by the agreed-upon amount of the advance. There may be additional fees, such as processing and closing fees, which MCA providers must now disclose in several states, including California, New York, Utah, and Virginia.
Factors That Affect Your MCA rate
The two most important variables in determining your factor rate are your revenue and average daily balance because MCA providers base their approval terms on risk. The lower the likelihood of repayment, the higher the associated risk. That means a higher factor rate. Other variables include:
- Business income
- Deposit history
- Average daily/monthly balances
- Business type
- Term length
- Financial statements
In any event, MCA providers charge higher rates for merchant cash advances than banks because of the flexible repayment terms, lenient qualifications, faster approvals, shorter repayment periods, and much less documentation.
What Happens If You Default On Your Merchant Cash Advance?
If you default on a same-day merchant cash advance, the funder can go after your bank account and other business assets and even seize other assets if you signed a personal guarantee. At the same time, MCA agreements typically include a reconciliation clause, requiring the funder to restructure the repayment terms if your business experiences a receivables shortfall.
That’s where ReconcileMyMCA.com comes in. We can negotiate more favorable payment terms with your MCA provider so that you have breathing room. Our debt relief specialists will assess your financial position, provide evidence that your business will return to profitability, and work to reconcile your merchant cash advance. We have an impressive track record of success negotiating with MCA providers and are widely known for helping small businesses like yours.
Contact Our Experienced Merchant Cash Advance Relief Specialists
If you are considering taking a same-day merchant cash advance or you are at risk of defaulting on an MCA agreement, turn to ReconcileMyMCA.com. We are dedicated advocates of small business owners who will fight hard to protect the business you’ve worked so hard to build. Complete the convenient intake form to get started. Our debt relief specialists are available 24/7.