Businesses that generate a lot of income by providing goods or services directly to customers on a cash and carry basis often rely on electronic payments to be sure they have the widest appeal possible. Accepting touchless payment, credit card, ACH, and other electronic methods means being able to work with practically anyone, no matter how they organize their finances. It also gives you a simple and effective tool for financing working capital in the form of a merchant cash advance.

Why Take a Cash Advance on Your Merchant Account?

Using a business asset like your merchant account to finance working capital means being able to go through a fast approval process, so you access funds faster. Advance payments are based on your earnings, so when you use an MCA to finance inventory or extra labor right before a big event, you can make windfall profits while paying off the advance almost immediately. Even when the cash is needed for a longer term, making more means paying down the principal faster. Making less means paying less in real dollars, so you can still meet your other overhead obligations. That flexibility is often reason enough to take an advance on your merchant account.

How Does a Merchant Cash Advance Work?

Your income through the merchant account is assessed over a 90 to 120-day period. That, along with other financial statements, shows the lender how much money that account generates and how dependent on it your business will be to make ends meet. If you make enough in cash transactions to cover most of your overhead costs, a larger advance is a lower risk to the lender than if you rely on the merchant account to pay for your basic expenses.

When you apply, you send in your financial statements showing your income as well as basic identifying information about your business. Typically, decisions are made in two or three business days. Once you receive the cash, your payment plan starts as negotiated. Different lenders offer different interest rates and repayment plans, so shop around to find the best one for your business.

Refinance as Needed

Once you pay off an advance, you can refinance your merchant account whenever you need the money again. Many companies use a merchant cash advance to access capital for large inventory purchases right before major holidays and other high-demand events. Others use them for seasonal redecoration, so interiors stay fresh and customers stay interested. How will you use yours to elevate your business?