Merchant cash advances are more and more prevalent in today’s society. The current economic status and tight credit standard are major contributors to the increase in advances. It is difficult for businesses to get the working capital that they need with the increasingly strict requirements for business loans. Business cash advances are an alternative way of receiving cash for everyday business needs. But, how does a merchant cash advance work? Let us explain…

Advances are a service provided by a provider to a business that receives credit card funding, usually in the retail or restaurant industry. The Cash Advance Provider basically loans the business a predetermined amount of money in exchange for a percentage of their future credit card sales.

Let’s take for example Joe’s Diner. Joe might not have enough cash on hand to pay his workers or to purchase new appliances for his kitchen. Say Joe needs $30,000 and he reached out to a Merchant Cash Advance provider for the money.

The provider would assess Joe’s past credit card volume and determine if he qualifies for the advance. They would determine an interest rate for the money lent. The rate is usually higher than a regular business loan because the advance is typically provided to businesses that do not have the credit or collateral to get funding from a traditional bank. If the rate for Joe’s advance is 30% then he would be borrowing the $30,000 and paying the provider $39,000 in future credit card sales.

The provider would collect the $9,000 by taking a percentage of the daily credit card volume the business receives. Say the percentage the provider takes is 8% of daily credit card sales and the business received $10,000 in credit card sales for the day. The merchant cash advance provider would take $800 (8% of the $10,000). This process would continue until the provider received the full $39,000. This payment process fluctuates with the cash flow of the business. The percentage will remain the same so if your business has a slow day, you will be paying less. This is a major selling point for the advance service. Regular bank loans have a set payment amount, which could be difficult to pay during slow times. A cash advance has the fluctuation to follow a change in business cash flow.

A merchant cash advance is a valuable alternative to a business loan. Some may think $9000 is a steep amount to pay but the criteria a business must meet for a standard loan is becoming more and more difficult to obtain. A business advance is a way of receiving quick and easy money to meet business working capital needs.

Merchant Cash Finder offers an added bonus to obtaining funds in a quick and easy process. Businesses can reach out to Merchant Cash Finder and they will locate multiple providers that fit your needs. They provide the business with 5 offers from the different providers. The business will determine which provider they wish to use after comparing multiple offers. This is a way to reach an array of merchant cash advance providers with just one painless step!

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