Merchant Cash Advance

Get instant cash flow today and repay as your business earns.

Simple repayments options and low requirements.

Competitive interest rates

Fast approval process

Access to funding in as little as 24 hours

All types of credit eligible

Low paperwork demands

How to Use Merchant Financing to Grow Your Business

Access to capital and funding is crucial to all businesses; however, it's not always easy for small businesses to apply for financing because few options exist and the application process for traditional loans is complicated and time-consuming.

Fortunately, online lenders offer alternative small business financing solutions, such as merchant cash advances, to bridge the gap. This page will discuss what merchant cash advances are, how they work, and how you can use them to grow your business.

What Can You Use a Merchant Cash Advance For?

Debt doesn't have to be a scary word, especially in the business world. Although you need to be mindful not to carry too much debt, borrowing money can also help your business succeed. Here are a few ways you can use an MCA to meet your current business needs or expand your operations.

Inventory Needs

As a business, you need products to make sales. Buying inventory in bulk can save you money through discounts, but it can use up most of your capital. Instead of depleting your cash reserve, you can use an MCA to stock up, update your product lines, and meet customer demand.

Unexpected Costs

When emergencies and unanticipated expenses arise, they can wreak havoc on a business's cash flow. An MCA offers a way for your company to access cash quickly. It's an excellent option for short-term relief so you can take care of your needs promptly.

Pandemic Assistance

Short-term relief has been essential for business owners during COVID19. Some business owners have had to buy expensive PPE to keep staff safe, while others have experienced a change in revenue. If you're experiencing hiccups in your business cycle due to coronavirus, you may be eligible for a pandemic loan.

Making Payroll

Finding the right talent is half the battle of running a successful company. Having to let staff go prematurely can hurt a business's bottom line. Financing helps owners avoid unnecessary layoffs and furloughs.

Purchasing and Renting Equipment

Getting equipment can be expensive. To avoid eating up cash reserves, owners have the option of financing their purchase rather than buying machinery out-right. Using a merchant loan can help you avoid tapping out your cash buffer. That way, you still have a financial safeguard for the ups and downs that come with running a business.

Commercial Rent

Maintaining a physical store location often comes with a whole slew of additional fees and expenses. When revenue temporarily dips, additional funds can help you make rent on time.

Operational Costs

Working capital refers to everyday business operating expenses, such as rent, wages, and utilities. An MCA can help you catch up on temporary cash flow gaps so you can pay your rent and bills on time to avoid late fees or have enough money to pay your employees.

Growth and Expansion

You can also use borrowed funds to grow and expand your business. Whether you need to purchase equipment or hire new staff members, you can use an MCA to make it happen. Invest in your business and stay ahead of the competition.

Taxes

Sometimes, owners run into the issue of owing more than expected come tax season. When in a bind, MCAs are a good option for bridging short-term cash flow gaps. Instead of using your nest egg to pay the IRS, you can repay owed funds with a portion of your future sales.

Onboarding Employees

Bringing new staff members on is no cheap feat. Business cash advances can be used for training hires and securing top talent. Investing in the right employees can help small businesses achieve larger initiatives.

What Is a Merchant Cash Advance?

A merchant cash advance (MCA) provides a business cash upfront in exchange for a percentage of its future sales. It's an alternative financing option for business owners to get funding without collateral or personal credit requirements. An MCA is also called a credit card processing loan because it's commonly utilized by companies that accept payments through a business merchant account.

As the name suggests, MCA isn't a loan but an advance based on a company's creditworthiness, future sales, and past debit card and credit card sales. When you apply for an MCA, you and the lender agree on an advance amount, a payback amount, and a holdback percentage. The agreed-upon holdback percentage is withheld from your daily sales as payment and the holdback percentage will apply until your balance is paid in full.

The payback amount will depend on a factor rate set by the lender based on their risk assessment of your company's creditworthiness. The factor rate is inclusive of fees and interest rates; you multiply the cash advance by the factor rate to get your total repayment amount. The higher the rate, the higher you pay.

Repaying an MCA back depends on your daily revenue. Thus, with more sales, you can pay back the advance faster. You're not obligated to pay more if you're experiencing low sales but it does prolong the repayment period.

What Types of Businesses Use Merchant Financing?

Merchant financing is best for businesses looking to fund a profitable opportunity to generate revenue, like the bulk purchase of quick-turnaround inventory. An MCA is also a great financing option for companies that are borrowing to expand their operating capacity through the acquisition of machinery or to bring in extra help during peak season. Businesses that utilize merchant financing include:

✓ Retailers, distributors, & suppliers

✓ Transportation companies

✓ Service-based businesses, like hair and nail salons

✓ Bars and restaurants

✓ Specialty trades

✓ Auto repair shops

An MCA is a great option for businesses that process a high volume of credit card transactions. Before taking on any business financing, make sure you understand the costs associated with your loan. In addition, ensure you have enough cash flow to make payments, especially since an MCA needs to be paid back daily.

5 Things You Need to Have for Merchant Financing Approval

The application process for merchant financing is quick and easy — far from the complicated and long process of traditional small business loans. Once your financing is approved, you can typically receive the money in your bank account within one to two business days. Check out the requirements below to determine if you can get approved for an MCA.

Financial Documents

To get started, book a call online with a trusted Wize Advisor. You'll then be matched with a dedicated adviser who will walk you through the entire process. Here are the general requirements and documents they may request:

✓ Your Social Security number or employer identification number (EIN)

✓ Bank statements, credit card statements, or payment processing data from the last three months

✓ Tax returns

✓ Financial statements, such as a balance sheet or a profit and loss (P&L) statement

Length of Time in Business

Every piece of equipment has a limited life span. When a crucial part of your business breaks down or becomes obsolete, repairs and upgrades are necessary to keep your operations going.

Repairs and equipment can be expensive, but you can use quick loans to afford the cost of repairs or new equipment. This way, you aren't taking out capital from your business and compromising your cash flow.

Monthly Income

You work hard to bring in more sales to your business. But what happens if you need to fill a large order and don't have enough materials or manpower?

You'll need to purchase materials or bring in extra workers. It can make sense to get funding through working capital loans like a business line of credit or short-term loans.

Credit Rating

Industries like retail, manufacturing, and transportation have seasonal trends where sales slow down. Some companies can cut back on expenses during these times, but it's not always possible.

If you're experiencing a downturn, you can bridge the gap with a quick business loan. A short-term loan helps you stay afloat and get your company back on track to success when peak season starts.

Debt-to-Income Ratio

Employees make the products and deliver services that create value for your business. But hiring and training employees come with an added expense that you may not have the budget for.

The capital you receive from a small business loan can provide the funds you need to hire new people. With more people, you can increase the number of products you make or customers you serve, meaning greater profits.

Growing Your Business With Merchant Financing

The main advantage of a merchant cash advance is access to quick and easy financing without giving up personal or business assets as collateral. This is because MCA lenders emphasize past credit card sales and future sales. With an MCA, you're also not restricted with how you can use the funds you receive.

Cash advances are an excellent funding option for small business owners who need capital but who may have less-than-stellar credit ratings. Apply today to determine if you qualify for a merchant cash advance with Wize Funding.

Types of companies have recently secured business cash advances from us:

✓ Contractors

✓ Distributors

✓ BarsHair and Nail Salons

✓ Specialty Trades

✓ Dentists

✓ Florists

✓ Barbers

✓ Health Care Providers

✓ Transportation Companies

✓ Retailers

✓ Restaurants

✓ Suppliers

✓ Auto repair shop

Best Cash Advance Funding Alternatives

Whether an advance loan is right for you depends on your unique business goals and preferences. We've outlined the most popular business financing solutions below for owners who want to explore other options:

Short-Term Loans

Term loans are a good fit for owners who want predictable and regular payment schedules. You receive a lump sum of money and pay interest on the total amount financed. Unsecured loans do not require collateral.

Invoice Factoring

Commonly referred to as invoice financing, factoring works similar to MCA loans. The key difference here is that the funds you receive are based on account receivables, rather than merchant sales.

Business Line of Credit

Credit lines provide flexibility and maximum control. You only pay interest on the capital you use, rather than the total amount you're eligible to receive. Owners can draw from an available pool of funds on an as-needed basis, as things come up.

Equipment Loans

Equipment financing makes sense for business owners who need to buy or rent machinery and equipment. Borrowers with bad credit can be approved. These loans do not require down payments or collateral.

FAQs about Merchant Cash Advance

Need a cash boost without the fuss? MCAs might be your answer. To help you navigate, we've broken down the most asked questions about this flexible financing option.

What's the difference between MCA and Factoring?

Both deal with cash advances, but how the advances are calculated is different. With merchant loans, you receive an up-front sum of money based on future sales. With factoring, you receive a capital advance based on accounts receivables.

What is a factor rate?

Factor rates are used to calculate how much you'll be responsible for paying back. The decimal figure is multiplied to determine the total amount owed. These are different than interest rates, which are expressed as a percentage.

What is a credit card processing loan?

Technically, MCAs aren't loans - they're advances. Despite this, many people use the term credit card processing loans to refer to merchant advances. These terms are often used interchangeably.

Am I eligible for an MCA if I have bad credit?

Yes! If you have bad credit, you may still be eligible for a business cash advance. A Wize lending advisor will go over qualification criteria with you in more detail when you book a call online.

What is a holdback?

Lenders “holdback” a percentage of your sales as payment for what you owe. Rather than paying funds directly to the lender on a fixed schedule, a certain percentage is taken off the top of card sales, until the total amount you borrowed is paid off.