5 Reasons to Apply for a Merchant Cash Advance for Your Small Business

Ezra Cabrera

Updated: September 12, 2019

If your business needs immediate funding, you might want to consider getting a merchant cash advance. A merchant cash advance (MCA) is an advance against your future debit or credit card transactions. This means it’s technically not a business loan. Once approved of an advance, the lender will deposit the funds into your business bank account. You can then repay the advance through your daily credit or debit card sales.

Many small business owners are now becoming aware that an MCA provides more benefits for small businesses than traditional bank loans do. Merchant cash advance lenders understand that sometimes, a business may need immediate funding for unexpected expenses. For this reason, the funding process for a merchant cash advance is quick and easy.

Benefits of a Merchant Cash Advance

How does merchant cash advance benefit small businesses? Here are five reasons why an MCA is a great funding source for your business.

1. Flexible Use of Funds

If flexibility of use were an important factor in finding financial solutions for your company, a merchant cash advance would be a great option. Many small business loans come with a list of limitations as to how you can use the funds. For instance, for SBA 504 loan programs, you can’t use it to purchase inventory. Likewise, you can’t use SBA Microloans to refinance the debt or buy commercial real estate. These spending limitations make it harder to find the perfect funding solutions to meet your business needs.

With an MCA, you can use the funds however you like – whether you pay for unforeseen expenses, make payroll, or fund a new marketing strategy. The flexibility of use benefits small businesses, especially if you have a variety of expenses that need funding.

2. Quick Approval and Funding

It’s common knowledge that it takes months before you can get approved of a bank loan. But for an MCA, it will only take a few minutes to apply and complete an online application. If your application goes through without a hitch, you can receive the funding you need in as little as 24 hours.

An MCA is a great choice if you need quick approval and funding. If you’re strapped for cash, a merchant cash advance can provide you with the working capital you need within a few days.

3. Doesn’t Affect Your Assets and Credit Rating

For traditional business loans, you need to demonstrate a good business history, have a high credit score, or put up collateral. After receiving funds from a small business loan, you will be asked to repay a certain amount of money every month. Otherwise, you’ll face financial and legal consequences.

For cash advances, you don’t have to pledge collateral. Since an MCA is a sale of your future transactions, you don’t have to prove your business or your creditworthiness. With an MCA, you don’t have to put any of your personal or business assets on the line.

4. Improve Your Bottom Line

One of the main reasons why you own a business is to make money. Therefore, if you need to secure working capital, it shouldn’t negatively impact your bottom line. A merchant cash advance enables business owners to take advantage of bulk discounts, pay for inventory purchases, stock up for peak seasons, hire more employees, and more. The funds from a merchant cash advance allow you to grow your business and satisfy your customers.

5. Support from Merchant Cash Advance Lenders

By applying for an MCA, you can cultivate a lasting relationship with your lender. An MCA specialist can help you with all the paperwork, processing, and payments. Aside from that, an MCA also ensures that you completely understand the terms and conditions of the agreement. Don’t hesitate to ask them if you have any questions. A merchant cash advance helps small business owners focus on what really matters: growing and expanding your business, paying your employees on time, and satisfying your customers.

Merchant Cash Advance for Small Businesses

Even though there are a number of reasons why a merchant cash advance is beneficial for small businesses, it’s not for everyone. MCAs are best for business owners who can’t qualify for bank loans because of two reasons: (1) they are new businesses and/or (2) they have a less-than-stellar credit rating. Regardless of the situation, you’re in, an MCA is one of the easiest and fastest ways of securing working capital.

Although owning a business can be rewarding, it can come with a lot of responsibilities, too. As a business owner, you have to be responsible of the financial aspect of your company. You have to oversee the expenses and make sure that you have enough to go on. It’s also your responsibility to look for financing solutions when you’re experiencing cash flow issues. That being said, taking out an MCA can prove extremely beneficial for you and your company.


Ezra Cabrera
Ezra Neiel Cabrera has a bachelor’s degree in Business Administration with a major in Entrepreneurial Marketing. Over the last 3 years, she has been writing business-centric articles to help small business owners grow and expand. Ezra mainly writes for SMB Compass, but you can find some of her work in All Business, Small Biz Daily, LaunchHouse, Marketing2Business, and Clutch, among others. When she’s not writing, you’ll find her in bed eating cookies and binge-watching Netflix.

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