Businesses often need outside financing to assist them in maintaining strong cash flow. One funding option that is fairly easy to obtain is a merchant cash advance. An MCA supplies you with a lump sum that you can utilize for any business needs that you have. You repay the provider with a percentage of upcoming credit card sales. This has the advantage of your repayment amounts matching your company’s sales volume. When sales are high, you make larger payments, but when sales are down, you pay less. Here are the steps you should take when preparing an MCA application.
Compare Providers
Before submitting an MCA application, compare the various financing companies that offer merchant cash advances. Consider the costs of the factor rate and advance. This will help you calculate what percentage of your credit card sales will go towards repayment. Additionally, be sure that your company meets the lender’s minimum requirements.
Ensure That Your Credit Card Processor Is Provider-Approved
After you have selected a lender, find out if the credit card processor you currently use is approved by your MCA provider. If not, you may need to switch to a different processor.
Prepare and Submit Your Application
An MCA application is much easier to prepare and submit than an application for a loan from a traditional bank. Firstly, you will need to prove that your business receives a high volume of its income from credit card sales. The provider will want to review documentation that shows your company’s current income. Especially through credit card transactions, as well as a projection of upcoming credit card sales. Be prepared to be asked for information on your company’s financial history, credit score, and structure.
Study the Contract
Once your application is approved, the MCA provider will send you a finalized contract. Before you sign it, carefully review all its details, including the percentage you will be required to remit and any specified penalties for defaulting on the contract’s terms. Ask for clarification about anything you don’t understand.
For more advice on properly filling out an MCA application, contact WCK Financial.