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Merchant Cash Advance Reviews

Securing a fast and reliable merchant cash advance can be an uphill battle, especially if you don’t know where to look. There are so many options, but which one can be trusted? Payment Processing 101 comes to your aid with in-depth research and full-length merchant cash advance reviews of the best and worst merchant cash advance providers in the market. Our reviews will give you all the information you need to get that small business advance you’ve been looking for. We make the task at hand simpler, without the need to scourge the internet looking to find a trustworthy provider you can bank on.

Our merchant cash advance reviews that give you access to the best advance cash provider for small and large businesses alike. We believe in working with the best. Therefore, you will find nothing but unbiased, tried, and tested content written by professionals with in-depth knowledge of the industry. So what are you waiting for, go over our merchant cash advance reviews and find one that meets your specific needs? With the information you gather here, you will be able to make a highly informed decision, eliminating the possibility of errors.

The Complete Guide to Choosing Merchant Cash Advance Companies

Through modern avenues of finance in the private and public business sectors, entrepreneurs and business owners have many options for funding their business venture. However, the financial crisis of 2008 has made many traditional lenders risk-averse in recent times. If you’re a business owner looking for funding, you would have to consider merchant cash advance companies to find alternative means of securing capital. 

This is true for business owners that lack the long credit histories that bigger and more established businesses have. Simply put, it’s challenging to secure a small business loan if you haven’t established yourself as a credible borrower. However, there are a number of diversely creative ways that can help, once you know which option works best. In many cases, this leaves merchant cash advance companies as the only options left for many small business owners. 

So do you transact most of your sales through credit card? If you answer yes to these questions, then merchant cash advance loans might be the best alternative for your business. But then again, who doesn’t accept credit card transactions in today’s business world? 

This article offers an overview of two alternative methods of business financing - merchant cash advances and short-term loans. Although, legally, the two are different, in practice, they are very similar in a number of ways. You can obtain both types from most merchant cash advance companies. 

What is a Merchant Cash Advance?

A merchant cash advance (MCA) is a type of funding for small businesses. Technically, MCAs are not loans. Instead, they are the sales of future receivables of your business. To put it simpler, merchant cash advance companies buy the future revenues of your business at a discount by offering you the funding you need. 

Fees for Borrowing

These are fees you pay for taking out funds from merchant cash advance companies. The fees are calculated with a flat fee multiplier. This multiplier is either called the “factor rate'' or “buy rate.” You get the sum you have to pay your merchant company back by multiplying the factor rate by the borrowed amount. 

For instance, when you borrow an amount of $10,000 with a flat fee of 1.3, you’ll have to pay back (1.3 x 10000) $13,000. You can also express the fee for borrowing as a percentage. In this example, your percentage borrowing fee will be 30%. However, you shouldn’t confuse it with the regular interest rate. 

Usually, you’ll get charged a flat fee ranging from 1.1 to 1.6 from many merchant cash advance companies. The exact amount you get for your advance depends on variables like the strength of your business. 

Repayment

After you’ve secured a merchant cash advance, you will have to make repayments by paying a fixed percentage of each purchase your business makes. The term for this percentage is the withholding rate. For instance, merchant cash advance companies might collect 10% on each sale a borrower makes. 

This means since your merchant cash advance company is the same company that processes your transactions, whether online payments or offline, they collect $0.10 of every dollar they process. Whereas, you receive $0.90. MCA companies have different methods for collecting their share of your sales. 

Split Withholding

There are existing partnerships between credit card companies and MCA companies. Hence, anytime they process your transactions, a portion is automatically sent to your MCA company (the stated percentage). You subsequently receive your share in your business bank account. 

Lockbox Withholding

Once you take a merchant cash advance loan, your MCA company will create a bank account in the name of your business. However, they will have full access to this account. The revenue generated by your business goes into this account. Hence, your MCA company will take out their cut first before transferring the rest to your actual business bank account. 

ACH Withholding

Merchant cash advance companies use automated clearing house (ACH) to deduct the percentage of their share from your business bank account every day. ACH is an Advanced Electronic Network banks use to transmit money between accounts. 

Merchant cash advances have no fixed date for the maturity of their loans. This is because your repayments depend largely on the cash flow of your business. Nevertheless, you are usually expected to repay your MCA within two years, given that you have a fairly consistent cash flow. 

Are You Qualified to Obtain a Merchant Cash Advance? 

Many small business owners consider MCAs as the best option for securing funding in times of financial hardship. However, many do not know that merchant cash advance companies charge some of the highest rates. Nevertheless, some of the perks like no collateral requirement and lack of business credit checks, mean relatively new businesses with little or nothing to prove can also get funding. 

In fact, some merchant cash advance companies welcome borrowers with lower credit ratings. Needless to say, these upsides come with one major downside, you will have to repay at relatively higher rates. When you consider the risk of lending to companies with bad credit scores and no collateral to back their loans, it makes perfect sense. 

Remember that MCA companies are also careful about getting their repayments. That’s why paybacks are intricately tied to daily credit card transactions of your business. Borrowers can easily escape repayment. 

Hence, if you’re a restaurant or store owner that mainly processes payments through credit card transactions, then this might be the ideal type of loan product for you. 

Advantages of Merchant Cash Advances

This guide might seem a bit indifferent to merchant cash advance companies and the packages they provide small businesses. However, like everything else, MCAs have both advantages and disadvantages. That’s why we must first state that they aren’t for everyone. However, if you must know the advantages of going in for MCA, then read on to find out:

Self-Paced Payment

Among the benefits of MCAs, the fact that you can pay back at a very flexible pace makes them very attractive to many businesses. Because repayments depend on the cash flow of your business. This is a percentage of your daily sales. Thus, for days when you have slow sales, your payments will not have to weigh you down. Therefore, your payments depend entirely on the rate your business generates money. Even if you choose other methods like mobile payment processing, it doesn’t affect the pace of your repayment. This isn’t something you’ll get from many loan facilities. 

Accessible

Upon conducting merchant cash advance reviews, you’ll observe that these facilities are extremely accessible. Hence, those with a limited credit history will find it best suited for their needs. However, you might have to show your MCA company that your business has enough volume in sales. Once this is ascertained, merchant cash advance companies know you will get enough credit card transactions to repay your loan. 

Preserve Equity

Many business owners look to their equity as the only means of raising income when the chips are down, and things get tough. However, with MCAs, you can get the funds you need for business capital and keep your equity intact. Thus, clients of many MCA companies believe the extra cost of MCAs is worth it, if they get to preserve the equity of their business. 

No Debt

The last but certainly not the least benefit to merchant cash advances remains the fact that they help your balance sheet remain free of debts. Apart from equity, which we mentioned above, it’s one of the few funding forms that help you keep a clean balance sheet that is debt-free.