Starting a business comes with many challenges but the most common one is procuring the required finances. Whether you are a small retail business owner or run a restaurant, obtaining finances to pursue your passion is not an uphill battle. You won’t have to worry about your loan getting rejected due to insufficient assets anymore. If your business sees a bulk amount of debit or credit card transactions, you are eligible to avail the benefits of the Merchant Cash Advance scheme.
Merchant Cash Advance (MCA) schemes are targeted towards merchants or business owners in order to meet their short-term business credit requirements. MCA is a small business financing option wherein a merchant can borrow advance cash based on the credit or debit card sales of the business. With the rise in paperless transactions, more and more customers are opting for credit or debit card payment options for their convenience. However, if you are a business owner and offer point-of-sale machine service to enhance the shopping experience of your customer, this can assist you in getting funds through the Merchant Cash Advance scheme for the temporary financial needs of your business. This financial aid scheme is usually availed by merchants when they do not qualify for a regular loan from the bank.
What is Merchant Cash Advance?
As the name suggests, Merchant Cash Advance is an upfront cash advance that is received by a merchant in case he or she has temporary business credit needs and does not qualify for a bank loan. Under this scheme, the business owner is eligible for a lump sum cash advance that he or she can repay with a portion of the daily debit or credit card transactions received by the concerned business.
Once the financial lender and the business owner makes an agreement under this scheme regarding the advance amount, term of the advance, holdback, and payback amount, the advance cash amount is transferred to the merchant’s account. The business owner then needs to pay a predetermined percentage of the future card receipts, known as holdback, every day until the entire advance is completely paid back. Since the lender has the account details of the merchant, any additional collateral is not needed unlike other small business loans.
Features of Merchant Cash Advance
- Financial aid for temporary credit needs Based on the monthly card receipts of the business, a customer can withdraw a lump sum amount in order to fulfil his or her short-term financial needs.
- Simple application process The application process of Merchant Cash Advance is far more uncomplicated in comparison to that of a traditional bank loan. Therefore, this credit scheme takes much less time to get approved.
- Flexible repayment tenure Under Merchant Cash Advance scheme, an agreement is made between the lender and the merchant regarding the repayment tenure according to the monthly card payday loans online direct lenders Massachusetts statements of the business. The customer has to pay the entire advance in full within this period of time.
- Quick credit disbursal During a temporary financial crisis, time is of the greatest import to overcome the situation. A customer will receive immediate funds transferred to his/her account if he or she chooses this financial scheme.
- No collateral is required Since the loan amount is transferred directly to the applicant’s account, the credit lender has the bank account details of the business owner. Hence, there is no requirement to provide any collateral in order to avail this scheme. Due to this reason, any business owner can apply for this credit plan even when he or she doesn’t have adequate assets.