Cash flow can be a challenge for any business, especially those that experience seasonal peaks and declines in sales. Because the cash shortage is usually temporary, business owners often don’t want to go through the hassle of applying for a bank loan.

The merchant cash advance is an alternative option that actually isn’t a loan at all. Instead, it is an advance on funds you have coming into your company that you repay with a daily holdback from your credit card receipts. Retailers and other companies that accept credit cards from customers at the point of sale can benefit the most from a merchant cash advance.

Daily Credit Card Receipts Rather Than Credit Score Determine Advance Amount

Another reason that a merchant cash advance is attractive for small business owners is that they do not need good or established credit to qualify. The finance company offering the advance reviews at least one month’s worth of credit card receipts to determine average volume. You may need to have a minimum amount ranging from $2,000 to $5,000.

Once approved for the merchant cash advance, you typically receive a lump sum of cash within one business day. You repay the advance by agreeing to a daily holdback of your credit card receipts. The term holdback refers to the amount of the credit card receipts recovered by the finance company that granted the merchant cash advance. Keep in mind this also includes interest, so you will repay more than you received over time.

Flexibility a Key Benefit of the Merchant Cash Advance

The benefit that small business owners seem to appreciate the most about an advance as opposed to a loan is the flexibility in repayment. Since the provider takes a percentage of daily credit card receipts and not a set amount, businesses with seasonal fluctuations pay more when sales are high and less when sales fall. This can make it easier to budget for repayment.

Please contact Increase Lending at your convenience to determine if a merchant cash advance is right for your company or to start an application.