What Is a Merchant Cash Advance?

Merchant Cash Advance Definition

A merchant cash advance is a short-term loan, often 3-6 months (or up to a year) from a bank or private lender, often with a high interest rate. This proves advantageous to borrowers in need of a fast approval and quick funding. A percentage of the loan can then paid back every day or week based on the volume of sales. So, the better business is, the more your loan is paid off, and vice-versa. Another payment option includes exchanging a percentage of your future sales.

Quick cash can be a great option, under the right set of circumstances. You must ensure the numbers make sense if you’ve come across a good business opportunity that simply cannot wait. If the situation doesn’t work out as planned, the accruing debt will quickly pile up.

Cash advance loans are often available through credit cards, and while these are very easy to obtain, the interest rates are even higher than a regular loan, and interest will begin accruing immediately.

Merchant cash advances, often used by businesses, are obtainable through a bank. If a business’ credit score is not as perfect as a bank would like to see, private lenders are there to approve these loans based on factors other than a credit score to determine creditworthiness. WCM can provide your business with up to $2,000,000 in a matter of days and has various options available to suit your specific needs.

Other Types of Cash Advances

Payday Loans

Another type of cash advance used in consumer lending includes payday loans which must often be repaid on the borrower’s next payday, including a fee. This loan type does not take credit score into account. Instead, the lender uses the state’s laws and the borrower’s paycheck size. As a guarantee that the borrower will pay the loan back, they may write a check dated for the future or a signed agreement for automatic payment (online).

Direct Deposit Advance

Offered at many banks, the borrower may ask for an advance on their direct deposits. Once the deposit is made, the bank takes what was borrowed plus their fees, and often this repayment is taken before any other transactions are able to claim their share. This service has been discontinued in many banks because of the complaints about fees.

If your business could benefit from a cash advance, WCM is a merchant cash advance lender offering fast business loans right when you need it most. Contact us today or fill out our simple form to see if you qualify.

We look forward to working with you!

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