Merchant Cash Advance FAQs: What You’ve Been Wondering, Answered
If you’re exploring funding options for your business, chances are you’ve come across merchant cash advances (MCAs). As a flexible and fast form of financing, MCAs can be a great solution – but they also raise a lot of questions. In this post, we’re answering some of the most common ones we hear from business owners like you.
1. Why is there a required time in business for funding deals?
Time in business is one of the key indicators we use to evaluate risk. Businesses that have been operating longer typically show more consistent revenue patterns and have weathered some of the inevitable ups and downs. This gives funders more confidence in your ability to repay the advance.
2. Why do some states require disclosures on the contracts?
Certain states, like California and New York, require specific disclosures to ensure transparency for small business owners. These laws are designed to help you better understand the true cost of the funding and make informed decisions. They often include details like the estimated annual percentage rate (APR), total repayment amount, and terms of repayment.
3. What’s the difference between an MCA and a traditional loan?
Unlike traditional loans, MCAs are not structured as debt. Instead of fixed monthly payments, repayment is typically a percentage of your daily or weekly sales. That means repayment adjusts with your cash flow – if your sales slow down, your payments do too. It’s a flexible option for businesses with fluctuating revenue.
4. How fast can I get funded?
One of the biggest advantages of an MCA is speed. Once your application is complete and supporting documents are submitted, funding can happen in as little as 24–48 hours. This makes MCAs ideal for covering time-sensitive expenses or taking advantage of new opportunities quickly.
5. What can the funds be used for?
There are no restrictions on how you use your advance. Whether you’re covering payroll, investing in inventory, upgrading equipment, launching a marketing campaign, or simply need working capital – the funds are yours to allocate where your business needs them most.
6. Will applying affect my credit score?
Most funders perform a soft credit pull during the application process, which doesn’t affect your credit score. However, it’s always best to confirm this with your representative, as policies can vary between funders.
Have more questions? We’re here to help.
If you’re considering an MCA or just want to better understand how it all works, reach out to our team. We believe informed businesses make smarter financial decisions and we’re here to support you every step of the way.