Tax & admin · 19 November 2019

Can your business benefit from a merchant cash advance?

Merchant cash advance can help your business grow

A well-managed cash flow is the missing puzzle piece that hopeful business owners often fail to find.According to statistics, a massive 82% of small businesses fail due to cash flow problems, with the majority simply unable to operate due to being unable to support the day-to-day running of the business.

When struggling with cash, many business owners turn to their bank with alternative funding options, primarily being arranged risky overdrafts and corporate credit cards.

But with increasing fees and unattractive lending options, more and more are turning to alternative means of business finance, including Merchant Cash Advances.

What are merchant cash advances?

small business banking
MCAs could be a lifesaver if you’re drowning in businessexpenses.
Originally, a merchant cash advance was structured as an advance payment to a business in exchange for an agreed percentage of future sales through credit or debit cards.

Still more suited to business owners who take a reasonable proportion of their income through credit or debit cards, a merchant or business cash advance is considered a short term, unsecured business loan based on future sales.

In agreeing to a merchant or business cash advance, you effectively sell a proportion of your future sales in order to receive a large cash sum to overcome difficulties with cashflow.

Why are they becoming more popular?

Unlike conventional business loans with set repayment terms, many business owners prefer Merchant Cash Advances because repayments are made daily as a percentage of the company sales.

This means that if a business has achieved low income during quieter sales periods, then a lower repayment is made.



Michael Foote is the founder of Quote Goat, a money-saving site for personal and business customers, offering leading comparison solutions in finance, energy, and insurance. Michael has over 13 years? experience working in the finance, insurance and currency sectors and is a self-taught expert in all things SEO.

Business Law & Compliance