Merchant cash advance loans are an available short-term funding option for small businesses. They offer quick access to funding without going through a lengthy application process and strict credit requirements. Businesses can get a cash payment up front with a merchant cash advance.
How Do Merchant Cash Advance Loans Work?
After being approved for a merchant cash advance, the lender provides the borrower with an upfront lump sum. The borrower agrees to repay the loan plus a fee by giving the lender a percentage of their daily credit card sales until the loan is paid off. Repayment of a merchant cash advance will likely depend on your business type and how much revenue you generate. The more revenue your business generates, the less time it will take to repay the loan.
How Much Can You Receive From a Merchant Cash Advance?
One common question small business owners have when considering merchant cash advance loans is how much they can expect to receive. Here are several factors influencing the amount of capital you can receive:
Amount of Cash Needed
Merchant cash advance providers can offer small businesses funding from $20,000 to $1 million. The amount you can receive is often based on a percentage of your business’s average monthly revenue.
Credit Score
The better your credit score is, the more you may be able to get from a merchant cash advance loan. Many lenders offer merchant cash advances to small businesses, regardless of the business owners’ credit scores.
Business Cash Flow
Your business’s cash flow can influence how much you can get from a merchant cash advance. Some lenders prefer to work with businesses with consistent and reliable cash flow since it is easier to repay a loan if money flows in regularly.
Lender’s Terms
Different lenders may have other loan limits in place for merchant cash advances or have varying requirements for approval. This could include collateral or FICO score requirements. Research potential lenders and compare their loan terms to help you get the most out of your merchant cash advance.
Business Type
Some businesses are more likely to be approved for higher loan amounts than others. Companies that process a high volume of credit card transactions may be eligible for more considerable cash advances. Some lenders may be more inclined to approve larger loans for less risky business industries. Retail stores and restaurants are often considered lower risk. If applicable, look for a lender with no industry restrictions.
Business History
Lenders may consider how long your business has been operating. Some lenders may prefer to work with established businesses since these have more reliable cash flow and are less likely to default on the loan. Check with your potential lender to verify whether or not they have a flexible minimum requirement for time spent in business.
Merchant Cash Advance Loans: A Funding Solution for Businesses
The amount you can receive from a merchant cash advance loan may depend on the lender’s terms, your credit card sales, and the time you’ve been in business. If your business generates a high monthly revenue and has been operating for some time, you may be eligible for funding. Consult a merchant cash advance advisor and apply today to get quick funding for your business.
