Merchant Cash Advance Interest Rates

Many small business owners want to know about the merchant cash advance bad credit. Interest rates are calculated on risk factors, however it would be safe to say that the interest rates associate with MCA loans are higher than those of banks. It would be worth mentioning here that merchant cash advances are not loans technically, although they do fulfill some of the functions of a loan.

So why apply for a merchant cash advance if the banks are offering deals that are so much better? The answer to this question is one word ‘approval’. Banks are slow to approve business loan applications and that too especially from small businesses, and this is because of the risk factors associated with the funding. Typically, banks are not interested in funding small business because they consider these to be high risk investments.

As a result almost 90% of all small business loan applications are rejected by banks, this puts small businesses in a tough spot. The reasons for rejections are vast, as banks have a complicated list of criteria and requirements from small businesses.

An MCA or merchant cash advance is also what would be known as fast business funding. This means that such loans are approved by private funders such as Funding Easily. There are different views associated with MCA loans from useful to not good at all, and this has got to do with the individual needs of the applicant.

Who should apply for an MCA

If a business owner has a pressing requirement for cash for their business immediately, to use as a bridging finance, then in that case a merchant cash advance is the easiest business loan to get. If a business owner has a requirement for a term loan they should apply for a term loan.

Typically, a small business owner who requires cash for their business quickly, or those who have had their loan applications rejected by the bank. Merchant cash advances do not promise anyone the world, all they deliver to small business owners is the funding they require. So if receiving the funding is of prime importance to a business owner, then a MCA will suit their business needs fine.

The requirements of some businesses suit the funding terms associated with MCAs, and these are the businesses that should take the MCA. There are of course those who would like all the excellent features of an MCA rolled in with the features of bank loans, and this simply does not happen in reality.

If a small business owner is looking for funding for the longest duration of time and at the lowest interest rates, then an MCA is simply not what they are looking for.

How do MCA loans work;

The sign up process is simple and so is the approval process. In addition to this one of the greatest advantages of the Merchant Cash Advance is the fact that it is also a very quick to receive form of funding. Literally, a business owner can have the funding as quickly as the next day after submitting a complete application form and 3 months business statements.

The duration of an MCA is a maximum of 12 months and some small business who want to repay it earlier can do that as well. The repayment options of an MCA are either daily, weekly or monthly, and this depends on the merchant as well as the funder.

The interest rates are higher than those of banks, generally in the double digits. However, as we have mentioned here, those who apply for MCAs are a certain kind of business owner, and not all business funding needs can be met with an MCA.

Merchant cash advances are also not loans, they are simply cash advances against the future sales of the business. This is one of the greatest defining features of the MCA loans. 

What are the requirements for a MCA

The requirements for an MCA are mentioned here as follows;

1.       The business needs to be at least 12 months old

2.       The owner of the business should not be in active bankruptcy at the time of the loan application.

3.       The gross monthly income of the business must to be at least $10 thousand, or over.

These are the basic qualification criteria for a merchant cash advance, and most small businesses are able to meet these requirements easily.

Also since these are unsecured loans, we do not require collateral and security or personal guarantees from small businesses. Credit rating also does not play a role when it comes to approvals and rejections, however the interest rates of the funding will be affected with the credit scores. Typically, the lower the credit score the higher the interest rate.

Requirement based MCA funding;

As we have mentioned here in this article, the requirements to be approved for merchant cash advance business cash advance bad credit is simple and easy. Most small businesses are capable of getting the loan they require as soon as possible.

The primary users of MCA loans are those who require instant funding for short term uses. Typically, businesses that have contracts that are time bound, where the business owner requires working capital to complete a project. Or in circumstances where a business cannot accept a contract unless they have the finances available to ensure that they can complete the contract. For such business requirementsand more, an MCA will work very well.

However, if a small business owner has in mind a term loan, but applies for an MCA then the cash advance would not serve the purpose.

A merchant cash advance however works similar to a cash advance USA. Meaning if a business requires funding desperately for whatever reason, this is one funding option that is feasible and attainable as a last resort. Even for those looking for a term loan who are denied the funding by the bank on any grounds. Typically, there are requirements that need to be met, however these are mild in comparison to the stringent requirements of banks.

For more information related to how to apply for a merchant cash advance, contact us. Our funding team will assist you with the information you require. Alternatively, you can click on the ‘apply now’ tab and fill in your details online yourself.