What is a Merchant Cash Advance?

Looking for a suitable financial option for your businesses when funds are limited? A cash advance is a great option. A merchant cash advance can be a terrific alternative for a firm with its cash flow disrupted but wants to expand its operations. A cash advance, unlike most other types of company finance, is not a loan. A merchant cash advance allows a business to borrow money based on projected sales or receivables.

Originally, a merchant cash advance was a small business financing technique that gave a business owner a lump-sum payment (cash advance) that was repaid with a percentage of future credit card or debit card sales. The term is now commonly used to describe various merchant financing structures not having a fixed repayment term and are repaid with smaller, regular (daily, weekly or bi-monthly) payments, versus monthly payments and a fixed repayment term, often longer than 2 or 3 years, for a traditional bank loan.

A merchant cash advance (MCA) isn’t the same thing as a loan. It’s a commercial deal in which the business owner sells the MCA financing provider his or her future credit card sales or other business receipts.