Our trusted business financing partner, Sharp Capital, offers competitive rates on merchant cash advance, business loan and equipment financing.
Frequently asked questions — Using merchant cash advances as cash flow and working capital financing solutions —
What is a Merchant Cash Advance?
Merchant Cash Advance FAQ – What is a Merchant Cash Advance?
A merchant cash advance provides a lump sum cash infusion to organizations which accept credit or debit cards as a form of payment from their customers.
The amount of a merchant cash advance is based on the portion of average monthly sales that occur as credit or debit card transactions. A merchant cash advance is repaid automatically by the merchant’s card processor as a small percentage of each debit and credit card transaction until the amount has been repaid, usually over a period of 6-18 months.
Some of the reasons our clients commonly cite when applying include:
- Desire to add new products or services to grow revenues
- Need working capital for expansion, renovation or remodeling
- Need to access working capital quickly to cover unexpected expenses
- Inadequate cash on hand to purchase inventory or equipment
- To resolve temporary cash flow shortages
- To fund marketing and advertising campaigns needed to grow
The amount of merchant cash advance financing available to an organization could be as much as 150% of their average monthly credit and debit card transactions, or even more. Request a free, no-risk quote to find out how much working capital your business could unlock with this financing tool.
Glossary of Terms
Merchant Cash Advance FAQ – Glossary of Terms
Some of the terms commonly used in merchant cash advance financing programs include:
Merchant: Any type of organization that accepts credit and/or debit cards as a form of payment from their customers; such as a restaurant, retail or service business
Cash Advance Rate: The financing fee, usually calculated as a percentage of the total Merchant Cash Advance
Funding: The process of releasing the advance to the Merchant; usually a wire transfer directly to a bank account
Funded Amount: The amount of working capital delivered to the merchant upon funding
Repayment Amount: The amount of the advance plus the financing fee that must be repaid
How does the process work?
Merchant Cash Advance FAQ – How Does the Process Work?
1. A merchant that accepts credit or debit cards as a form of customer payment applies for merchant cash advance financing.
- There are no fees to apply, and no obligation to accept.
- Approval can be made in as little as 24 hours, and account funding can occur as quickly as 3-5 business days, or in some cases, in hours.
2. Once approved and funded, repayment occurs automatically through the merchant’s card processing company as a small percentage of each credit and debit card transaction until the amount has been repaid.
- Merchant cash advances are usually paid back far more quickly than business loans, usually over 6-18 months.
- Flexible repayment terms may also be available.
- Merchant cash advances are often renewable, so that once paid down to a certain point the merchant can take out additional working capital.
1. APPLY
Apply and we’ll source merchant cash advance offers that correspond to your business goals and preferences.
2. GET CAPITAL
Get answers within hours. Then receive a cash flow infusion within days (or even hours) from approval and offer acceptance.
3. GROW
Use the money to expand, renovate or offset unanticipated expenses – for nearly any business reason you choose.
MERCHANT CASH ADVANCE FAQ VS BUSINESS LOANS
Merchant Cash Advance FAQ – How does this type of financing compare to small business loans?
Business loans are granted based on an organization’s estimated credit worthiness, collateral, and ability to repay. Because merchant cash advances are based on an organization’s average monthly credit and debit card sales history, and repaid from future sales, credit worthiness is not the most important consideration in determining approvals.
An organization that has an imperfect credit history or low credit score is unlikely to receive approval for a traditional business loan, but may quickly obtain a large merchant cash advance and get working capital to grow their business or address cash flow challenges. Plus, while banks often require the pledging of collateral before approving business loans, merchant cash advances are unsecured, and approvals may not even require UCC filing or personal guarantys.
Finally – and sometimes most importantly – business loans often take weeks (or even longer) to go from initial application, through the underwriting process, and to a final determination for approval or denial. By contrast, merchant cash advance approvals and offers might take as little as 24 hours, with funding in 3-5 business days of approval and offer acceptance. Merchant cash advances might be preferable to business loans when fast access to working capital is desired.
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