Looking For Flexibility in Your Financing? Try an MCA!

Small business owners realize that access to financing is vital to the continuation of their operations. No matter how profitable the company gets, there’s simply going to be the occasional period where cash flow is hampered by many expenses coming due at once, delayed payments on accounts, or a combination of the two. It’s also true that many strong and established businesses have a hard time coping with this when they are not prepared for it, and the resulting cash crunch has the potential to severely affect their credit standings. Luckily, there are financing opportunities that provide for a fast turn-around and that also work with borrowers whose credit rating is not at the top of its game. One of the leading cash advance formats that has both of these features is the merchant cash advance, or MCA.

Understanding how it works and how to put it to work for your business is the key to getting the cash you need quickly and being able to turn things around so you get back to the upswing part of your cash flow cycle.

How MCAs Work

Advance services work in ways that are similar to factoring, only instead of looking at the receivables on your books, they look at the volume of credit card transactions that your company does in an average month. Once that number is determined, a cash advance is calculated, and repayment is handled as a portion of the credit card receipts every month. This means that when business booms, you automatically pay off the advance quickly. On the other hand, when business undergoes temporary shrinkage, so does your MCA payment, so it stays out of the way of your other obligations.

Fast Cash

Most cash advance services are able to calculate the advance size in 24 hours or less, because most of them use cutting edge technological tools to speed both their review of your application and the final paperwork needed for approval. In a lot of cases, cash is distributed this quickly as well, but individual times will vary from provider to provider and a first-time approval sometimes takes a little longer than it will once your relationship to your financing provider is established.

The beautiful part of MCA services is that they grow with your business. That means that the more your volume of sales grows, the more cash you will have available the next time you need a quick seasonal redecoration or renovation, a quick advance to weather a slow period, or the cash to get the supplies you need to keep the shelves stocked.

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