Merchant Cash Advances
Owning a Business
Located in the heart of metropolitan South Florida, about 12 miles from both Miami and Fort Lauderdale, the city of Aventura is known for its modern high-rises and opulent single-family homes.
The Aventura Mall, the third-largest mall in the United States, is the city’s main attraction. The beautiful South Florida beaches are only a quick drive over the William H. Lehman Causeway.
The JW Marriott Miami Turnberry Resort & Spa, a Mediterranean-style getaway known for its genuine hospitality, enthusiastic staff, and enlightening activities, is also located in Aventura. Two Aventura championship golf courses, both rebuilt by Raymond Floyd, are only one of the numerous world-class attractions at this resort.
So, you managed to land yourself a beautiful storefront at the Aventura Mall. You’re excited to start selling your artisanal beauty products but you know you’re competing with department stores like Sephora etc. and the rent in the mall is steep. Over a 12-month period you come to find that beauty products sell best in spring and summer, leaving you with somewhat of a cashflow deficit in winter and fall. You need a way to work with this deficit to keep things running. What is the best option for you? A merchant cash advance is the form of small business financing which makes the most sense for your unique business situation.
Merchant Cash Advances for
What Is Merchant Cash Advance and How Do I Use It?
A merchant cash advance is a loan intended exclusively for businesses (merchants) who accept payments via card machines. What makes this product stand out from the others is the financing and payback system. To get the money they need, merchants often prepay for a portion of their future sales.
Lenders can get easy-to-understand data from card machines. It’s a reliable method for determining how much a company can afford to pay back. They also provide simple repayment. The majority of MCA lenders will deduct a percentage of your card sales automatically, making repayment simple and fair.
Typical Uses for a Merchant Cash Advance
Here are some of the most frequent cases in which a retailer could benefit from a merchant cash advance:
- Cash flow is essential for running a firm, and this is why you need working capital.
- Capital for expanding a company’s operations, such as the funding for new projects or additional investment.
- Increased sales and profits may be achieved by increasing available supply, or inventory.
- In the event that you are confronted with a hefty tax or VAT bill that you may not be able to pay in full; you may use an unsecured loan to make the necessary payments.
- You may use an MCA to assist you make payroll even if business is sluggish throughout the month.
- To reiterate, an MCA is a costly loan that should only be used if absolutely necessary.
A MCA is a good option for businesses who require access to rapid liquidity in the event of unforeseen needs. The money might be used for anything from stocking up on supplies for a big order, to training new staff members in anticipation of a busy period, or investing in brand new equipment.
If your company is still in its beginnings and has not been approved for a typical bank loan, you may want to consider a merchant cash advance instead. It’s also a good option for small businesses that don’t have much in the way of collateral. Also, MCAs provide both short-term funding and adaptable payback schedules.
Loan providers vary. Different creditors have different minimum monthly charge thresholds; some may ask for transactions at a minimum of $2,500 while others want $5,000.
Most will demand that you have been in business for a year, but some may give you credit if you’ve been operating for less than six months. Depending on the lender, you may need to make as many as five payments a month. Some lenders may need less.
But there are creditors that care less about your monthly credit card purchases and more about your credit score. Financial institutions often request borrowers have credit scores between 500 or 600. Although many lenders will not work with firms that have a poor credit score, there are those who will. Unfortunately, the rates and costs charged by these MCAs are far higher than the norm. They may be as much as 5-10% higher than average retrieval rates.