Applying For a Merchant Cash Advance – Everything You Need To Know

Is your small business in need of a quick infusion of funds? A merchant cash advance could be the best card on your table. While a bank loan application will require you to fill out lengthy forms and present a myriad of documents, applying for a cash advance takes minutes, after which you can get your funds in just a few days.

That said, getting your application for an advance approved isn’t as straightforward as you may think. Below are some important questions to ask and answer before knocking on your financier’s door.

What is a merchant cash advance?

As the name implies, an advance is a sum of money offered up front by a financier in exchange for a slice of your future sales, which can be credit and debit card payments made at the point of purchase or recurring ACH bills.

How do I know if I’m eligible?

As long as you have been accepting card or ACH payments for a few months, a provider will likely approve your application.

What do I need to apply?

Cash advances have become increasingly popular among small business owners because of their stress-free application process, which is usually done online. Signing up for an advance with a specialist like First American Merchant only takes presenting a record of your recent sales, proof of identification and business ownership, and filing a one-page document.

Some providers may, however, insist on other records besides the basics, depending on your type of business and the level of risk. If yours is a firearms dealership, for instance, a financier may require you to present the relevant licenses, bank statements and credit records, among other documents.

When will the money get to my account?

If you’re applying for a merchant cash advance, your business is likely in urgent need of funding. Thanks to the relatively fast and simple underwriting process, an advance provider will approve your application in just a few hours, and the funds will follow in one or two days.

How long will it take to repay the advance?

A cash advance is similar to a loan in that you will need to pay it back. However, while a loan is repaid in fixed monthly installments, a merchant cash advance is cleared with a pre-determined percentage of the payments you receive. If your sales are high, therefore, you could have your advance cleared in as little as a few weeks. On the other hand, if your business is suffering a low season, you may get stuck with an advance for months. Nevertheless, at no time will you feel pressured to make mandatory fixed payments to the financier.

What about the fees?

Cash advances come with numerous benefits to merchants. Unsurprisingly, however, most providers attach significantly higher rates and fees to advances than they do to business loans. The charges will be even heavier if you’re a high-risk merchant, or if you have a poor credit score.

When applying for an advance, therefore, compare several merchants and identify the ones with the most favorable rates. Also, be sure to read through the contract carefully to uncover any hidden fees that may be hidden in the fine print.

The best merchant cash advance is that which is easy to apply for, takes little time to be approved, and whose repayment won’t drive your business to the ground.