You can’t start a business without money, and you certainly cannot keep it running if you are low on cash. When businesses are short on funds, they tend to take out loans from banks and traditional financial institutions.  However, working with a bank for a loan may not be the best option for businesses as they come with strict guidelines when it comes to fees, interest rates, and repayment. The lack of flexibility may make it harder for businesses to pay back their loans which can then affect their credit score. Fortunately, this is not the only option for your business.

Businesses have the option of getting cash advances through merchant cash advance services.  Merchant account service providers like First MCS provide merchant cash advanced services to get businesses like yours the cash you need to keep your operations running until you can boost your revenue. Cash advances from merchant service providers have more flexible terms and can get you money faster than dealing with a bank or financial institution.

In this guide, we discuss the benefits of merchant cash advance services over traditional loans for businesses. At First MCS, we can help businesses get cash advances fast with terms that accommodate their specific needs.

What are Merchant Cash Advance Services?

Merchant cash advance services are cash advances offered to businesses by merchant service providers instead of traditional financial institutions and banks. The goal of these cash advances is to provide businesses with the financial support they need to keep their operations going and increase their revenue. 

These cash advances are not loans, they are up-front cash advances that are based on future sales and revenue. The merchant service providers that offer cash advances do so in exchange for a share of the future revenue the business will earn with the support of the cash advance. The terms of these cash advances are based on the revenue which helps prevent putting a financial burden on the business.

How Do I Apply for Merchant Cash Advance Services?

If your business could benefit from a cash advance, talk to your merchant service provider about your options. You will likely have to start the process with an application to determine if your business is eligible. The underwriter will work with you to understand your needs and help determine the terms of the cash advance, including a timeline for repayment, interest, and fees.  The terms for cash advances are more flexible than those from traditional banks and are generally decided based on your specific needs.

Next, you will finalize the terms of the cash advance and receive your cash as soon as you are approved. You may get your cash advanced in 2-3 days, and sometimes in as little as 24 hours. After you receive your cash advance, you can work with your merchant service provider to set up automatic payments that come out of your revenue to pay the loan back. Many providers will base the repayments on the revenue your business earns.

Benefits of Merchant Cash Advance Services

Choosing to get a cash advance from a merchant service provider instead of taking out a loan from a bank comes with many benefits. The following are the main ways your business can benefit from merchant cash advance services:

• Get cash fast: It can take anywhere from a week to 1-3 months for a business to get a loan from a bank or financial institution.  Cash advances can be approved in 1-2 business days, and you can receive the funding in 2-3 business days.  This is ideal for businesses that need cash fast to keep their operations going.
• Flexible terms: Banks and financial institutions have fixed terms when it comes to business loans, including interest rates, fees, and repayment.  With merchant cash advance services, the terms are much more flexible.  In most cases, you can work with the underwriter to define the terms based on based on your specific needs.
• Automated payments: Merchant service providers work with businesses to set up automatic payments to repay the loans, which eliminates the possibility of late payments.  These payments are based on the actual revenue of your business.  When your revenue is up, you can pay more towards the advance.  If sales have been slow, your automatic payments will be less.  Banks and financial institutions have fixed repayments which can be difficult for businesses to keep up with if sales are slow.
• No credit impact: Cash advancesfrom merchant service providers have no effect on your credit score.  If a business has difficulty keeping up with the terms of a loan from a bank, it can negatively impact their credit score which makes it harder to get loans in the future and may have a detrimental effect on the business.

Getting a cash advance fast from a merchant service provider can help you invest in your business in the following ways to grow your business and boost your revenue:

• Inventory: Invest your cash advance into more inventory to ensure that your most popular items are always in stock.
• Equipment: You can upgrade your current equipment or invest in new equipment to help make your operations more efficient and cost-effective.
• New staff: If you are short-staffed, invest in new employees to get the help you need to take your business to the next level.
• Marketing: Putting more money into your marketing efforts will help you amplify your message and attract more customers.

Is My Business Eligible for Merchant Cash Advance Services?

In general, businesses that have been operating for at least 6 months with a processing volume above a minimal threshold for the previous 3 months are eligible for cash advances. The exact requirements for the amount of time your business has been in operation and the minimum processing volume may differ between merchant service providers. There will also be additional terms and conditions that apply.

What is Revenue Based Financing?

Revenue based financing is when financing is done for a business in exchange for a certain percentage of future revenue. Terms such as the dollar amount of the payments and length of the payback period are based on the actual revenue of the business to avoid putting a burden on the cash flow of the business. Businesses will pay higher payments when sales and revenue are doing well, and the payments will decrease if sales are slow.

How Fast Will I Receive the Funds?

After approval, you can receive the funds in the checking account for your business in 1-3 business days.  In some cases, you may get your funds in as little as 24 hours.

Do Cash Advances Effect My Credit Score?

Cash advances from merchant service providers will not impact your personal credit score or your business credit score.

Do Cash Advances Have an Interest Rate?

Technically, cash advances are not loans and therefore, they do not typically have interest rates like bank loans. Instead, you may pay an additional fee that is determined by the amount of money you receive in your cash advance. Merchant service providers often do not charge penalties or late fees either.

Merchant Cash Advance Services from First MCS

If your business needs cash fast and you do not want to go through the hassles of taking out a loan from a bank or financial institution, First MCS can help with our cash advances services. We tailor our cash advance service loan agreements to your specific needs to get you the cash you need fast.  You will work with our underwriter to determine the dollar amount of the advance, the amount of time you have to repay the advance, and additional fees based on your unique situation.

If your business needs cash fast, do not hesitate to call First MCS at (866) 673-3099 for more about our merchant cash advance services.