The most succinct way to describe a merchant cash advance (MCA) is as a loan alternative. It can, in some sense, accomplish the same things. But without the interest and the need for qualifying metrics like credit scores and time in operation. The lender or financier is providing the merchant with cash now, for a defined percentage of merchandise sales later. As you can well surmise, this method of lending is best-suited to retail shops and other businesses. Ones that derive the bulk of their revenue from consumer credit cards since the MCA provider is recompensed via daily credit card receipts.

The Multiple Ways to Enact a Merchant Cash Advance

It’s important to note that MCAs are not just for businesses that are heavy on credit/debit card sales. They can be readily structured to aid many other types of businesses these days. The first type we’ll cover involves you receiving the upfront cash you need, in exchange for authority for the MCA company to withdraw an agreed-upon percentage of your daily/weekly sales. You will be handing over your bank account information to them for this method. Which is aptly named the ACH Merchant Cash Advance.

The other option is a form of this and is just a variation of the payment interval. Instead of daily debits, the agreement you make with the MCA company could be weekly or even monthly. Although, the latter starts to have more in common with the traditional loan – except credit history is unnecessary to qualify. The payment schedule can be predicated on your sales, too, which is a big benefit during slow seasons. Keep in mind, though, that when sales are strong – you’ll pay more.

Deciding which merchant cash advance option is viable depends on a long-term assessment of your finances. Will you lose money or gain once you take into account the annual percentage rates? As well as the potential to go into a debt cycle. This is precisely where the experts at WCK Financial can help; drop us a line when time permits.