Ali Habib Mayar Merchant Cash Advance
- Merchant Cash Advance 101

What is a Merchant Cash Advance?

Business owners often require immediate access to cash so that they can meet the need for capital in the short term. A merchant cash advance is one way of getting a loan that helps to circumvent the lengthy processes of approval, as well as the credit requirements that are required for obtaining traditional term loans from financial institutions.

A merchant cash advance is technically not considered a loan but is cash advanced on any future income that a business gets from sales against credit cards. The companies that provide such loans, like Platinum Rapid Funding Group, will look at daily credit card receipts in order to judge whether the normal business of the enterprise requiring the loan, has the capacity to pay back the advance in time. Once this capacity is established, the advance is deposited into the account of the applicant for the loan, almost immediately. In this form of financial convenience, a business basically sells a portion of its future credit card sales receipts.

How Do You Repay a Merchant Cash Advance?

Repayment of such a merchant cash advance can be daily or weekly and gives the lender a direct access to the merchant account of the borrower. The lender asks the borrower to sign an agreement that details the advanced amount, the payback amount, the holdback and other terms agreed to. The agreement determines the percentage of the daily credit card sales that will be withheld so that the cash advance can be paid back. This is the holdback amount that the business will have to continue to pay, till the payback amount is paid in full, plus any other fees agreed on. The access to the credit card merchant account acts as collateral against the amount advanced to the borrower.

The convenience of the process and the convenience and ease of repayment makes it easy for businesses to get the required working capital that can keep the business running smoothly. It also means that such cash advances must be taken only when they are needed to immediately take advantage of opportunities to take advantage of discounts offered, or special marketing opportunities that can lead to an increase in business.

Why Use a Merchant Cash Advance Company?

The greatest advantage of a merchant cash advance for any business is that you pay as you sell, and it does do not require you to pay a fixed sum every month. There is no time limit to paying the loan, though most lenders are more comfortable making these advances to a business that has a robust credit card usage among its customers. Credit reports also do not have any impact on the chances of being given such advances, and the judgment is made by the lender solely based on authenticated credit card sales, which they can verify. Lenders are at high risk, but they do use funding models that determine future credit card sales and are more comfortable lending to businesses that will be able to pay back the loaned amounts in a short period of time.

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