Merchant Cash Advances: What is it & How
Does it Work?
Merchant cash advances have become a popular financing option for small
businesses in recent years. But what is a merchant cash advance, and how does
it work?
A merchant cash advance (MCA) is a type of funding that allows businesses to
borrow money based on their future sales. The lender provides the funds upfront,
and the business repays the loan with a portion of their future credit card sales.
MCA loans are often used by businesses that have trouble qualifying for
traditional bank loans. That's because the approval process for an MCA is
typically much easier and quicker than for a bank loan. And, unlike with a bank
loan, there's no set repayment schedule with an MCA. Instead, the business
makes daily or weekly payments to the lender, until the loan is repaid in full.
If you're thinking about taking out a merchant cash advance, it's important to
understand how they work and what the potential drawbacks are. Read on to
learn more.