Unlike a traditional loan, merchant cash advances are business-to-business transactions that involves the selling of a company’s future credit card sales or a part of the company’s bank deposits in exchange for an up-front sum of money at a discount. Merchant cash advances range in value from as low as $5000 and up to $2,000,000 and with terms that range from 3 months up to 2 years. The pay-back on these transactions are normally made each business day or sometimes every week using an EBT deduction directly from the company’s bank deposits or credit card sales.
Merchant cash advances are typically used when a small to mid-sized business is in a cash crunch and needs funding quickly. Approvals for these types of loans can take just hours to be completed with the funds being made available within a week. Because this type of commercial financing is driven by a company’s cash flow, companies can be approved even if they have poor personal or business credit.
There are several advantages to merchant cash advances. Because personal or business credit is not important, nearly all applications are approved at some level of funding. Also, the process is very simple and it’s fast, which can be very important if a business is in need of funding rapidly. Minimal documentation is required, and most applications can be made online, by email or over the phone. This type of loan can also be used as a sort of bridge loan to fund operations while other traditional forms of financing are being procured. When using a merchant cash advance as a bridge type loan, businesses can meet their cash flow needs when there is a dip in their receivables.