Category: Finance

Merchant Cash Advance in Canada: The complete guide

If you are considering how merchant cash advance company Canada work, you should know that merchant cash advance loan offers a small business owner with an alternate financing option. This is separate from the conventional bank loans. Business owners obtain their financing upfront from provider of merchant cash advance loan and pay for the advance with the percentage of daily sales of the business. Merchant cash advance is considered to be a good option for any small business owner which collects payment with the help of cash, credit cards, and checks, have high volume of sales, require funding quickly, and don’t qualify for a traditional bank loan.

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How Does Merchant Cash Advance Work?

Merchant cash advance offers funds to the small business owners in exchange for a certain percentage of the business’s income over time. Payments are usually made on a regular basis with the help of the business’s daily credit card income. The total amount that you have to repay will be calculated by the factor rate. This multiplier is usually based on the financial status of the business.

The Terms and Features of Merchant Cash Advance

Merchant cash advance provides a small business owner an easy and quick method to secure funding immediately. The application and approval process can be completed within one day.  It has pretty high approval rate and you will get it within a day or two. Unlike the conventional business loans, merchant cash advance loans doesn’t need collateral.

However, when you learn about Merchant Cash Advance company Canada, you will come across the fact that it pricier than the other forms of loan.  It usually cost 20% to 50% more than the principal amount. Merchant cash advance is treated like commercial transaction and not simply a loan. There is no enforcement or regulation.

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How can You Qualify for Merchant Cash Advance Loans?

It is easy to qualify for merchant cash advance. A majority of the providers offer easy application along with quick turnaround times. Quite unlike the conventional loans, the applicant will not have to multiply the number of years they have been operating the business for qualifying. Even with a lengthy operating history and a good credit will help the applicants secure favorable payment terms. A short operating history with an average credit will not preclude you.

One of the factors that you need to check while studying how merchant cash advance work is if the business has had a consistent sales volume.  Even if there is no magic figure, most of the providers have 75-250% sales volume.

There are people who consider if merchant cash advance loan is right for their business. MCA is an option that a business needs if it has to have access to cash quickly and has the required amount of cash flowing through the account on a daily basis. Since credit requirement is quite less than a small business loan, this can be an option for the business which does ample credit card transactions each and every month but is known to have a weak credit profile.

If you have studied how does MCA or merchant cash advance work, you will know that for this you will have to make arrangement for the collection from a certified credit card processor, complete the application process, and read and sign the contract.