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Lending Merchant Cash Advances

Merchant Cash Advances

Merchant Cash Advances (MCA) have been an available form of financing for years now.  They are not your typical bank financing but can provide valuable cash flow to a business quickly and on a short-term basis.  In this environment of COVID, banks have become more conservative and retail store locations are under more scrutiny, this form of financing can prove to be a difference maker.  In many instances, to apply for an MCA, a 1-page application is required, verification of 2-3 months of bank statements and a most recent merchant statement are all that is needed to start the process.

MCA’s are not a loan but an advance lump sum payment in exchange for future credit/debit sales.  The lender will request bank statements to evaluate the business cash flow, determine the funding amount and a repayment plan.  Typically funding on this type of financing can be completed in 48-72 hours.  Repayment plans are a daily debit to the business account for a specific dollar amount, for a set number of days/months.  The language associated with MCA’s is not what you would see in traditional bank lending either.  Instead of interest rates you will likely see buy and sell rates or factor rates.  An example would be as follows: you may receive a factor rate of 1.4, which would translate to every $1 received by the business would pay back an additional $0.40 for the use of the funds. 

What has driven the popularity of MCA’s is larger banks have started to shift away from these smaller loans.  An unfortunate consequence of the 2010 Dodd-Frank Act was that small business lending became less profitable for banks.   Traditional bank lending is going to evaluate business cash flow, credit scores and collateral.  That process could take a month or more and requires a significant level of effort to get there.  When options for small businesses are limited, like they are today, all options should be on the table. 

The key for any business is the level of trust you have for those you are working with.  Still Water Solutions has the experience and the network that we trust to help you.  We are always available for a conversation to discuss what your needs are and the appropriate path.  Having worked with business owners for years now we know your time is valuable, and we want to help you make determinations as quickly as possible. 

Please do not hesitate to reach out for a conversation.  We want to be an asset to you and your business. 

If you would like to apply for a financing request please visit here.

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