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2M7 Merchant Cash Advance Review

2M7 provides up to 125% of your average monthly sales in a Merchant Cash Advance that you’ll repay incrementally based on your daily sales transactions.

To be eligible for a 2M7 Merchant Cash Advance, your business must be located in Canada, excluding Quebec, operational for a minimum of 90 days, without any open bankruptcies, and accepting credit and debit cards with a minimum of $10,000 in monthly revenue.
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30-second take

  • The 2M7 Merchant Cash Advance offers small businesses in Canada a cash advance instead of a business loan of up to 125% of their average monthly sales. The advance is repaid via an automatic deduction of a percentage of your daily sales.
  • Think about the 2M7 Merchant Cash Advance if you’re looking for quick access to cash for your business, but you’re having trouble securing a loan.
  • Pick something else if you’re looking to establish or improve on credit history for your business. Because the MCA isn’t a loan, it won’t help you build your credit.

Expert review

The 2M7 Merchant Cash Advance is a worthwhile option if you’re a business owner who needs cash quickly and can pay it back relatively fast. All you need to do is fill out a basic online application, including details about your company and its monthly income, and you’ll be contacted by 2M7 for next steps on your advance. Funds can be deposited into your business account within hours.

The Merchant Cash Advance is also a viable option for businesses that don’t have long operational histories or may not be approved for a conventional business loan. The MCA doesn’t look at you – or your company’s – credit history. The emphasis is on your company’s future sales.

Unlike a conventional loan that requires you to make set repayments each month, your repayments for your cash advance fluctuate based on your sales.

First, what is a Merchant Cash Advance?

In a nutshell, the 2M7 Merchant Cash Advance – or MCA – is a financing option available to small businesses like retailers, restaurateurs and start-ups. It’s not a business loan. With an MCA, you receive cash in advance of actually earning it.

2M7 assesses you against your anticipated future credit and debit card sales and you can take out a cash advance of up to 125% of your typical monthly earnings. Instead of repaying a loan through fixed instalments, your cash advance is repaid through a set percentage of each sale you make until it’s fully repaid.

Does my business qualify?

To be eligible for a Merchant Cash Advance, you as the applicant will need to provide:

  • A government-issued photo ID
  • Your merchant ID number
  • Recent bank statements
  • A void cheque
  • A business bank account where your cash advance will be deposited

To qualify for a standard funding package, your business also needs the minimum:

  • Operational for a minimum of 90 days
  • Accept credit and debit cards (minimum of $10,000/month)
  • Be located in Canada, excluding Quebec
  • Have no bankruptcies (personal or commercial)

What provinces is the 2M7 Merchant Cash Advance available in?

The 2M7 Merchant Cash Advance is available to small- to medium-sized businesses across Canada, excluding Quebec.

What makes the 2M7 Merchant Cash Advance unique?

The 2M7 Merchant Cash Advance isn’t a loan. Business loans typically require you to have good credit, while an MCA focuses on your future sales projections. Since MCAs are repaid using future credit and debit revenue, credit ratings and collateral aren’t relevant in the application process.

The approval process for an MCA is much quicker than a business loan, too. In some cases, a business owner can have their advance deposited within two days.

The repayment plan is much more flexible as well. Instead of set monthly payments, an agreed-upon percentage of daily sales is collected to pay back your advance.

What are the benefits of the 2M7 Merchant Cash Advance?

  • Easy, secure online application with quick turnaround. After filling out the application form online, you’ll receive a free quote. Funds are typically available to you on the same day you request them and approvals take roughly 4 to 6 hours.
  • Loans provided with no bad credit or no credit. 2M7 does not require credit checks or collateral of any kind in order to get started. The amount for your cash advance is based on your typical monthly sales.
  • High approval rates. There is a higher than 97% approval rate for Merchant Cash Advance applicants.
  • Does not register on your credit file. The cash advance doesn’t affect either your personal and commercial credit histories.
  • Flexible payments. Your payback schedule is based on your business’s cash flow.
  • No hidden fees or interest charges. Other than a one-time factor rate charge, you won’t pay any interest on your advance.
  • National reach. 2M7 provides the Merchant Cash Advance to businesses across Canada, excluding Quebec.

What to watch out for

  • MCAs don’t help you build credit. Because the Merchant Cash Advance isn’t a loan, you won’t build a better credit history for your business. If this is a priority, you may want to look into other options.
  • High factor rate. If the factor rate is high on your cash advance, your MCA could end up costing your business more than a traditional business loan might, especially over the long term.
  • No access in Quebec. 2M7 offers the Merchant Cash Advance to businesses across Canada, excluding Quebec.

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What can the 2M7 Merchant Cash Advance be used for?

Businesses can use their Merchant Cash Advance without any restrictions. Most use their advance to increase: cash flow; buy, repair or upgrade equipment; stock up on inventory; expand or redesign their facilities; or hire new staff to grow the business. Businesses can also use their advance to invest in marketing, or consolidate and pay off debts.

How is my interest rate determined?

2M7 doesn’t charge an interest rate for your Merchant Cash Advance. Instead, you’ll pay a one-time cost – or “factor rate” – based on the value of sales you might have in the future.

The factor rate will typically fall between 1.18 and 1.48. Your cash advance amount is multiplied by your given factor rate to determine the total amount you need to pay back. For example, if you’re given $25,000 at a factor rate of 1.30, you’ll need to repay a total of $32,500 ($25,000 x 1.30).

Your factor rate is pulled together based on a number of factors, including your industry, your business’s location, years in business, number of employees and cash advance amount. 2M7 says it uses proprietary software to create a credit score for your business to set the factor rate for you. The longer 2M7 works with your business, the more funding it will be able to provide and at a lower factor rate.

Aside from the factor rate fee, there are no other costs for the cash advance and application process.

Keep in mind, the factor rate is different from an interest rate in that the factor rate doesn’t take time into consideration. Interest rates are typically calculated based on the year – or annual percentage rate (APR). The factor rate is a fixed amount and the speed at which you pay back your cash advance is based on your sales and the performance of your business.

How will I repay my Merchant Cash Advance?

2M7 sets up an automated repayment plan so that each day a small percentage of your sales are withdrawn and put towards repaying your loan until the full amount is paid back.

The percentage that’s withdrawn is called the “withholding percentage” and ranges from 4.00% - 30.00% of your daily sales. That way, 2M7 only gets paid when you get paid. The withholding percentage varies depending on factors such as the amount of your cash advance, your typical daily credit and debit card sales, the industry you work in and the size of your company.

For quick clarification, the withholding rate isn’t your interest rate either. The 2M7 Merchant Cash Advance doesn’t come with an interest rate, but you’ll need to pay a one-time factor rate that’s worked into the total amount you need to repay.

How do I apply?

If you want to apply for a Merchant Cash Advance, click on the “Get Started” button on the 2M7 homepage to be securely redirected to the online application. The application form asks for personal information, including your full name, email and phone number. You’ll also be asked about your company name, how long it’s been in business, the types of payments you accept and your company’s monthly business revenue.

Once you fill in the application, you’ll be contacted by 2M7 for next steps on getting approved. You’ll need a government-issued photo ID, your merchant ID number, recent bank statements, a void cheque and a business bank account where your cash advance will be deposited.

I got the cash advance. Now what?

Once your application is approved, 2M7 will deposit your Merchant Cash Advance directly into your bank account. They’ll connect directly with your payment processor to set up your repayments – 2M7 works with most major payment processors in Canada.

You’ll work with 2M7 to decide on your withholding rate – or the percentage of your daily sales that’s paid to 2M7 until your advance is fully repaid. You can monitor and manage your repayments online through your 2M7 account.

Frequently asked questions

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