Raising cash advances for businesses....

Nov. 30, 2012 - PRLog -- A Business Cash Advance is a way for a business (subject to it’s fulfilling certain criteria) to raise a ‘lump sum’ against future payments that they may take from their customers’ debit and credit cards (sometimes referred to as ‘receivables). So you could think of it as a loan where the collateral is future income from cards. Perhaps the most oft-used reference in the industry for this would be a Merchant Cash Advance (MCA).  You could also see the term ‘Business Cash Advance’, it usually means the same thing.

If you’re trying to raise cash advances in this way then you’ll find that providers will most certainly have very different eligibility criteria than you’ll find with lenders.  A merchant cash advance is not covered by the usual loan legislation as it is not a loan or a form of lending.  Your business would agree to ‘sell’ a percentage of its future cleared debit and credit card transactions, to a provider, in exchange for a lump sum of working capital (which is, effectively, the purchase price). Many businesses will find that a MCA is flexible and there is a huge advantage that repayments are linked to the amount of money you are processing – so, when times are good you’re paying back more but when times are slow (such as in seasonal trades) then the repayments are lower.  

With a merchant cash advance it also means that there is no fixed time frame for delivery of the purchased receivables – the provider will only be paid as your business gets paid. This obviously differs quite fundamentally from say, a bank loan, where there is no flexibility of amounts or terms.

Generally speaking when you are raising cash advances in this way you are usually able to spend this lump sum (or additional working capital as some will call it) on any business related requirement.

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