Merchant cash advances (MCAs) can be a quick and easy way to get your hands on fast cash for your business. These advances come with very flexible repayment plans, but they can be much more expensive than business loans due to higher rates and fees. Learn more about how MCAs work, including how your business can benefit from this type of cash advance and what you need to do to qualify.<\/p>
A merchant cash advance lets you borrow money in exchange for a percentage of your daily credit card and debit sales. Lenders determine the amount you can borrow by looking at your historical sales data. This means your lender will look at your receipts from previous months to determine how much they want to lend you \u2013 with a hefty \u201ccost of doing business\u201d fee added on top of that amount.<\/p>
Although your lender sets the amount of money you can borrow, the amount you\u2019ll pay back month to month will vary based on your sales. For example, let\u2019s say you borrow $100,000 and agree to pay it back with 20% of your card sales. If you earn $50,000 in card sales your first month, you\u2019ll automatically pay $10,000 onto your MCA. If you earn $75,000 in your next month, you\u2019ll pay $15,000 onto your debt. This will continue until you have paid your advance in full.<\/p>