Merchant Cash Advance, Atlanta Georgia | MCA

MERCHANT CASH ADVANCE, ATLANTA

Ideal for entrepreneurs accepting credit card payments, Merchant Cash Advance or MCA offers an advance based on percentage of the borrower’s future credit and debit card sales. Often, the MCA lender withdraws a fixed amount, on a daily or weekly basis, from the borrower’s account to recover the advance amount. Fundamentally, to get an MCA, one needs to sell a portion of the future credit card sales. This is a kind of funding which doesn’t solely consider the credit history of a business to approve an application. Instead, the MCA providers evaluate risk factors and look at the daily credit card receipts to determine if the business is capable of repaying the amount on time.

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THE PROCESS

An agreement is made between the borrower and the MCA lender on the advance amount, payback amount and holdback percentage. The amount is transferred to the borrower’s account only after the agreement is made and finalised. Post disbursement, a decided percentage of the daily revenues or credit card receipts are withheld, each day, to repay the Merchant Cash Advance. It is termed as “holdback” and continues till the entire advance is repaid. The concept is, the more transactions a business does, the quicker the advance can be paid back. In situations when transactions go low, the draw from the borrower’s account is also less. A collateral is never required in case of MCA, as the lender gets access to the borrower’s business account.

REPAYMENT STRUCTURE

A MCA borrower mostly needs to pay back 20-40% of the amount borrowed. The percentage is often known as a factor rate which is generally 1.20-1.40 (approximately). There is a difference between the holdback amount, which needs to be paid on a daily/weekly basis and the repayment amount for the total advance.

The holdback amount is based on the fund a borrower receives, the timeframe of the advance repayment and the size of the monthly receivables. Holdback rates are mostly 10-20%. However, the rates often depend on the business and merchant cash advance (business cash advance) lender’s evaluations.

Application Process to Qualify for Merchant Cash Advance

Application

It requires the borrower’s social security number and other business’ income related data.

Approval

An approval often comes on the same day i.e., within 24 hrs of the application.

Setting up credit card processing

MCA requires the business to get a new credit card processor.

Details finalization

The advance amount, repayment amount, factor fee and timeframe for the repayment are finalized.

Automatic fund disbursement

The advance gets disbursed by the MCA provider and deposited into your bank account.

Getting an MCA is far less hassle compared to a traditional loan. However, rates on MCA are typically higher than all traditional funding or other small business loan options. Contact Zero Point Finance today to learn more about merchant cash advances. We look forward to helping you get started with funding services for your small business.