Whether it is about hiring fresh talent, investing in business equipment, or covering business costs, a merchant cash advance is one thing that keeps the business processes going.
Merchant Cash advances are a moderately new and alternative budget opportunity for small business owners. In this, a settlement assistance provider lends your enterprise a lump sum cash advancement established on your previous dealings with them.
Getting cash loans in Ireland might be difficult for a small business owner and time-consuming as well. Instead, a Merchant cash advance (MCA) emerges as an innovative and flexible product for securing the funding they need.
What is a Merchant Cash Advance (MCA)?
Merchant Cash Advance is flexible business funding that offers cash advances to business sellers for a portion of future business sales. It has a different payment structure. Instead of customers making one fixed payment every month, he pays an allocation of day-to-day credit card deals until the payment is settled in full.
The creditor works with your credit card provider to get information about your credit card usage and inquire about business sale volume. And he also collects money from the credit card terminal.
Merchant Cash Advance is not a loan but a quick funding option for small businesses. Because of this, it doesn’t harm the credit history, and one can secure a loan without staking the collateral. It is a non-collateral advance.
Are you facing the following circumstances? You Might need an MCA!
An MCA is a great option if you need quick funding to cover the cash flow gap in your business, purchase equipment, or cover receivables.
Here are some more reasons you need Merchant cash advance:
- Your company lacks enough assets to put up as collateral for the loan
- You run a seasonal business with a fluctuating sales graph
- Concerns about business and personal credit history
- You want to avoid the hassle of late payment or penalty arising from missing the deadline
Thus, you can use MCA for multiple business purposes like:
- Purchasing stocks
- Large order funding
- Business expansion
- Paying taxes
- Purchasing business equipment
- Thus, you can use the advance to grow your business.
How is MCA Beneficial for Your Business?
There are many benefits of MCA. Let’s analyse some of them:
Quick transfer
Payment service providers make quick transfers to businesses. Thus, if you are a small business in need of quick funds, a Merchant cash advance can help you feel cash in hand quickly. The ideal turnaround time for the same is 48 hours, but it can be quicker than this. The maximum wait period is about 2-5 days.
If you are already a merchant and not the new one, you have avoided a lot of hassle involved already. It is because fresh merchants go through proceedings before getting card transactions through a terminal.
Thus, you could be in a helpful position than going through credit checks!
No or limited credit check
If a business applies for a loan through credit unions or financial institutions, they conduct a credit check and ask for good credit scores.
Opposed to this, the qualifying process of Merchant Cash Advance is relatively simple and does not require one to go through a hard credit check.
It means even if you do not have an impeccable credit score, you could still qualify. It just requires businesses to make credit card sales each month. So, if you are a business that makes good sales with credit cards, Merchant Cash Advance (MCA) could be an option for you.
That means you can secure a loan without having a good credit score and quick processing.
Do not require risking assets
However, getting a loan approved may require one to go through a credit check and other checks if you secure a business loan.
Apart from this, many creditors might ask you to stake your asset as collateral for a business loan. Opposed to this, Merchant Cash advances do not require one to stake collateral. They base future sales.
However, if the future sale graph isn’t clear, you might be asked to put up collateral for approving the loan. You don’t have to prove your worth if you have a clear sales graph of your business to prove the creditor.
Easy repayments
Merchant cash Advance repayments depend on multiple factors and the criteria that your lender approves of. The business owner could pay the repayments weekly, monthly, or daily basis. It is opposed to the traditional short term loan in Ireland, where one has to pay monthly repayments.
In this, a business shares the flexibility to pick the flexible repayment route. As this advance is based on your future business earnings and a percentage of credit and debit transactions, you can pay according to how much you earn.
A merchant cash advance may not be suitable for every business type but is way better than business loans if you do not qualify for traditional business loans.
Competitive interest rates
The interest rate charged by the creditor depends on multiple parameters like the lump sum you get, the length of the repayment period, risk assessments after the credit check. Thus, different lenders have and offer different interest rates in MCA.
If you could re-negotiate the terms of securing an advance, you may bag it at a competitive interest rate. As the advance given is flexible and unsecured, the interest rates could be high. The credit processing units only require your credit card processing history and maybe a light credit check before sanctioning the sum.
Best for businesses with short trading history
PCP business lenders are experts in the retail business sector and thus are likely to succeed based on the company’s data as business turnover.
There is a lot of competition for a business to sign up for MCA, and therefore, it is subjected to more risks than traditional finance sources, like high street banks.
Thus, if a business is at the initial trading stage, it could secure the advance easily compared to businesses trading already. If a business hits the ground and makes cash payments, it could gain the cash advance. As MCA is an unsecured advance, you don’t have to put up collateral.
If you want quick cash for your business, a Merchant cash advance could be the best option.