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What is a Merchant Cash Advance?
A financing tool that provides businesses with same-day capital to deploy towards your business operation.
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How does a Merchant Cash Advance work?
A Merchant Cash Advance (also known as a Business Cash Advance) is a sum of money given to a business in exchange for the future receivables of that business over an agreed-upon time period. The funding process can be broken down into 5 Stages: Application, Analysis, Funding, Repayment, and Renewal.
Stage 1 - Application
Lenders like us need to gain an understanding of the particular financial situation that your business is in. All lenders will require you to submit documents about yourself and your business along with your application. Standard requirements will include your identification, recent bank statements, and information about your company's cash flow.
Stage 2 - Analysis
After receiving your application and business information your lender will then analyze the risk associated with the requested amount. After your lender has reached a verdict, they will reply to you with an offer either matching your request, provide an adjusted offer, or a decline.
Stage 3 - Funding
Once you're satisfied with an offer, you can accept the advance and its terms to receive the funds quickly. Funders like us will be able to fund you the day of and week of approval. Other funders may request to distribute the advance over a longer period.
Stage 4 - Repayment
The last step is starting to make payments. The lender will automatically debit your account with the agreed-upon re-payment amount and frequency.
Stage 5 - Renewal
Typically Stage 4 is the final step, but that's not always the case. If you're halfway through paying off an advance, another opportunity can arise to help your business. Funders like Velocity Capital Group can provide you with additional capital once a significant portion of your principal sum has been paid off. Staying financially agile is indispensable in today's business landscape.
How does a Business Cash Advance help businesses?
A quick influx of capital provided by a Merchant Cash Advance can open new doors for businesses. Determining where to properly deploy your advance is crucial. There are 4 main areas that businesses can focus on to make the most of their advance.
1
Create New Revenue Streams
New capital can mean an opportunity to expand your business' revenue streams. Use fresh capital to create new areas where customers can interact with your brand. (New Website, Product Development, etc.)
3
Fix On-Going Business Problems
There could be something in your business that's going very wrong, and until it's resolved, the company will operate inefficiently. Capital from a merchant cash advance can be put to quick use to erase whatever issue is hurting your business.
2
Improve Operations
Improving and adding to your place of business can be a strategic use of an advance. Often this is focused on reducing operational costs. Think of what equipment, software, or person will bolster the success of your business.
(Improved Machinery, New Productivity Software, etc.)
4
Jump at an Opportunity
Opportunities can present themselves out of nowhere. Almost anything that can boost your business will require capital and is time-sensitive. Fast funding from an MCA allows you to move quickly and capitalize on the opportunity.