FAQ's
What is a Merchant Cash Advance (MCA), and how does it work?
An MCA is a form of business financing where a provider advances you a lump sum of capital in exchange for a portion of your future credit card sales or daily bank deposits. You repay the advance, plus a predetermined fee, through a percentage of your daily sales until the total amount is settled.
How is the amount of the MCA determined for my business?
The MCA amount is typically based on your average daily credit card sales or bank deposits. Lenders assess your recent transaction history to determine the advance amount they are willing to offer, often ranging from a few thousand to several hundred thousand dollars.
What are the key differences between an MCA and a traditional business loan?
Unlike traditional loans, MCAs do not involve fixed monthly payments or interest rates. Instead, they rely on daily sales deductions. Traditional loans have longer terms, while MCAs have shorter repayment periods and higher costs due to factor rates.
What steps should I take to apply for an MCA?
What are the typical repayment terms for an MCA?
Repayment is typically a percentage of daily credit card sales or bank deposits until the total advance amount, plus the fee (factor rate), is repaid.
How is the advance amount determined?
The advance amount is usually based on a business’s average daily credit card sales or bank deposits, with lenders considering recent transaction history.
Is good credit necessary to qualify for an MCA?
While credit scores are considered, MCAs are generally more lenient with credit requirements compared to traditional loans. A strong sales history is often more important.