Merchant Cash Advance(MCA) is often considered one of the least stringent financing options, which often turns out to be a saviour for businesses in need of quick money. However, a business owner must choose an MCA lender, who will lend money on a flexible repayment term and charge prudently. The fees of the MCA lenders vary drastically and the costs for the advances are dependent on a factor rate. When it comes to financing options, there are many. MCA, like any other financing option, has its perks and drawbacks. But, before choosing a financing option, an entrepreneur firstly, needs to understand his/her business’s needs. If opting for an MCA, one needs to conduct thorough research to find out a lender, who is ideal for his/her business type, trade history and current financial condition. 

      Things to consider while choosing an MCA (Merchant Cash Advance) lender:

      • MCA lenders generally don’t charge a heap of additional costs during the approval of the finance. However, closing costs are required in the case of certain business transactions. Hence, before selecting an MCA lender, one needs to communicate with the lender and find out if there are any payable closing costs apart from the fee for the cash advance. Also, MCAs, unlike bank loans, do not come with fixed interest rates. 
      • One of the primary factors, based on which, borrowers decide on MCA lenders is the amount of credit card sales the business processes each month. Often, lenders need the borrower to show three to six months of credit card statements, to make sure the borrower earns enough to repay the advance. For seasonal businesses, whose monthly credit card sales drop during off-seasons, it is beneficial to look for an MCA lender with a lower monthly income requirement or select the one who accepts credit card sales statements of not less than 12 months. 
      • Most MCA lenders approve the applications of only those who have a trade history of at least 1 year. But, there are some, who are considerate about the business age and offers fund to even those who started trading just a few months back. 
      • Though MCA application processing, approval and fund disbursement don’t take much time, after all the required documentation is provided to the lender, but, the amount of documentation that is required to process an MCA often varies from one lender to another. Some lenders only ask for an application and the monthly credit card sales statements, whereas, others might require the borrower to submit documentation like lease agreements, voided checks, photo ids etc., along with the bank statements. Companies looking for urgent cash should look for lenders that require minimum documentation to approve the application quickly. 
      • For a business, that has its branches in multiple locations, it is best to choose lenders, who provide a specific amount of funds for each location. However, the amount that gets approved, depends on the monthly credit card sales of the business.


      In the case of MCAs, the lenders offer an upfront sum of cash, and in exchange for that, the borrowers provide them with a portion of his/her business’s future credit card sales. Quite different from traditional loans, MCAs offer the borrowers a chance of repaying the borrowed amount by making weekly or daily payments out of their earnings, till the entire amount is recovered. However, many MCA lenders earn a bad reputation for faulty agreements, that often put inexperienced entrepreneurs in financial turmoil. But, not all lenders are the same. Only through significant research, one can find an MCA lender, who has a good reputation, charges reasonable fees, offers an advance to fit the financial needs of the business, provides good customer service, and agrees on a repayment method, convenient for both the lender and the borrower.