3 Key Things To Know About Merchant Cash Advances
If you’ve been wondering how to pull your business out of a recent cash crunch, you may want to consider applying for a merchant cash advance, sometimes also called an MCA. Running a business entails constant expenses, from replenishing stock to fulfilling new orders to covering payroll to planning for growth and expansion. Unfortunately, if you’re stuck in a slow season or the economy is currently experiencing a downturn, it’s not always easy to maintain positive working capital on hand. The good news is, options like MCAs can help tide you over so you can keep operations up and running. To learn more about merchant cash advances, how they work, and why they could potentially be helpful for your business, read on.
1. They’re Technically Not a Loan
If you’ve ever applied for a conventional bank loan before, you know that the process can quickly become a lengthy hassle. You may be relieved to know that MCAs are not technically a loan, however. Because they work by providing an advance based on your monthly credit card transactions, they give you financing in the form of an advance, not a loan. Lenders are then usually repaid by an automatic transaction from your accounts, making it a simple way to get the money you need when you need it, without having to worry about complicated repayments.
2. Your Credit Score Isn’t Essential
Since MCAs involve credit card transactions, you may think that your credit score is important to get approved. However, as long as you’ve been in business for at least a year and have over $2,500 in credit card transactions per month, you may still be able to qualify even if your credit score is less than perfect.
3. It’s a Useful Short-Term Tool
MCAs may not be the ideal long-term solution for your company, since they may ultimately be more expensive than a conventional loan. However, if you aren’t in need of long-term financing and simply need cash in the short term to tide you over, you can look at MCAs as a tool to help you get through tough times or take advantage of unexpected business opportunities.
Keeping your business running smoothly entails a lot of regular expenses, from paying employees to simply fulfilling new orders. In slower periods, however, it can be difficult to find the cash to keep operations going. If this is the case, you may want to consider applying for a merchant cash advance to get you through. With these facts in mind, you can feel confident in making the right decision for your business.