What You Need to Know Before a Merchant Cash Advance

A merchant cash advance is a flexible form of alternative financing that provides you with a lump sum of cash in exchange for a future claim on credit card receipts. It can be ideal for businesses that take direct payments from customers for products and services. If approved, the lender would deduct a set percentage of your daily or weekly credit card receipts until you have paid the merchant cash advance in full. This includes interest added by the lender.

Small businesses with occasional cash flow issues due to seasonal fluctuations appreciate the flexibility of this type of loan. Because the amount of your repayment is a percentage of your credit card receipts, you pay more during busy times and less during slow times. Having this type of flexibility with repayment helps you manage your company’s cash flow more efficiently. We offer some tips on how to prepare for applying for a merchant cash advance below.

Qualifications Lenders Require to Approve a Merchant Cash Advance

You should formally register your business, have a separate bank account, and accept credit card payments before you consider applying for this type of loan. Some other things you will need include:

• At least three months of operating history 

• Average monthly credit card volume that meets or exceeds the lender’s requirements 

• At least three months of bank statements for a business checking account  

In most cases, merchant cash advance lenders do not consider the personal or business credit of the applicant. This is because future credit card receipts act as collateral for the loan. However, you should still check your personal and business credit reports and clean them up if necessary since your lender might review them.

Could this type of flexible alternative financing be right for your business? Please contact Advanced Commercial Capital today to learn more about the benefits and terms of a cash advance or to request an application.

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