Merchant Cash Advance Funding: Revolutionizing Business Finance | 7 Park Avenue Financial

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7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Merchant Cash Advance Funding and working capital solutions  – Save time and focus on profits and business opportunities

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Understanding Business Cash Flow Challenges

The Growing Popularity of Merchant Funding

Merchant funding via a business cash advance predominantly becomes the main solution when a smaller or retail-type firm considers a new or alternative financing strategy.

Businesses typically need a business bank account to get a merchant cash advance, and the approval process is often quick, making it feasible even for those with bad credit.

Extended Payment Terms and Cash Flow Issues  

As customer payments slow down (many firms seem to be waiting 60 to sometimes 120 days for the customer payments), the challenge of running your business from a cash flow perspective increases.

The irony is, of course, that many customers still post 30-day terms on their invoices and purchase order acknowledgements from their client base.

Comparing different financing options, such as merchant cash advances and business credit cards, reveals that interest rates can significantly impact the total cost of borrowing over time.

Non-Financial Solutions to Cash Flow Problems

We should not fail to mention, of course, that there is one very obvious 'non–financial 'solution for your company, and it does not even involve additional financing effort. It is simply to enforce collections more strongly and reduce what is known as your 'day's sales outstanding' to a more manageable level. Any major dent you can put in your 'DSO' will improve working capital and cash flow.

Managing Payables

Of course, there is the other non-financial alternative, which is the other side of the equation. That's to slow payables, which also improves cash flow—but you don't want to do that at the expense of your suppliers, whom you value.

Understanding Business Cash Advance Loans

Differentiating from Traditional Bank Facilities  

So we have discussed why you want to consider a business cash advance loan and to some extent what your non – financial solutions are.

But let’s just make sure we understand what we are talking about. When you work under a bank facility, your receivables and other assets are collateralized or pledged as security for an overdraft. That’s the best simple way to explain to clients what a business cash loan is not!

Unlike traditional bank facilities, merchant cash advances can be obtained even with bad credit due to their focus on business performance rather than personal credit history.

The Mechanics of Business Cash Advances  

However, it is the sale of your future or credit sales, thereby increasing your working capital and cash flow. Repayment is based on a percentage of future credit card sales, allowing businesses to access capital quickly without affecting their credit score. More cash flow and more immediate cash flow is the most apparent solution to merchant funding.

Considerations When Choosing a Merchant Cash Advance

Avoiding Pitfalls

We spoke of the price you must pay in merchant cash advance loans. Suppose you negotiate the wrong type of facility.

In that case, you might find yourself in the same situation that many of our clients have found when they come to us with financing woes: they feel that in spite of the significant cash improvement, their merchant funding firm partner is running their business.

Finding the Right Partner  

Business cash loan facilities in Canada are available with firms who have very high professional standards, are well funded to meet all your financing needs, and in fact tailor their financing service to your business, once they understand the uniqueness of your challenges.

Additionally, having a business bank account is necessary for the application process and the disbursement of funds.

3 uncommon takes on Merchant Cash Advance Funding:    

1. Merchant Cash Advance Funding as a tool for seasonal business stabilization

2. Leveraging Merchant Cash Advance Funding for Rapid Inventory Turnover Strategies

3. Using Merchant Cash Advance Funding to capitalize on time-sensitive bulk purchase discounts

KEY TAKEAWAYS  

• Quick access to capital without traditional credit requirements

• Repayment based on a percentage of future sales

• Flexibility in funding amounts and terms

• Higher approval rates for businesses with consistent credit card sales

• No collateral required, reducing risk for borrowers

Conclusion  

Merchant Cash Advance Funding revolutionizes short-term business financing by providing rapid access to capital based on future sales projections.

So what’s our bottom line in our cash flow information interchange – it simply:

• Determine if you can achieve self-financing status via the more prompt collection of receivables or increased sales

• If financing is in fact needed, consider business cash advance funding as a working capital strategy

Call  7 Park Avenue Financial, a credible, trusted, and experienced advisor who will model a working capital and cash flow solution that reaps benefits and cash on terms you can live with daily.

FAQ    

How quickly can I receive funding through a Merchant Cash Advance?

Merchant Cash Advances typically provide funding within 24-72 hours after approval, allowing you to address immediate financial needs or seize time-sensitive opportunities.

Is collateral required for a Merchant Cash Advance?

No collateral is required for Merchant Cash Advances, making them an attractive option for businesses that may not have significant assets or prefer not to risk their property.

How does repayment work for a Merchant Cash Advance?

Repayment is usually based on a fixed percentage of your daily credit card sales, ensuring that payments align with your business’s cash flow and fluctuate with your revenue.

Can I qualify for a Merchant Cash Advance with less-than-perfect credit?

Yes, Merchant Cash Advances often have more lenient credit requirements than traditional loans, focusing more on your business’s sales performance and potential.

What types of businesses can benefit from Merchant Cash Advance Funding?

Any business with consistent credit card sales can potentially benefit, including retail stores, restaurants, e-commerce businesses, and service-based companies.

What are the typical fees associated with Merchant Cash Advance Funding?

Merchant Cash Advance fees are usually expressed as a factor rate, typically ranging from 1.1 to 1.5 times the advance amount, depending on the lender and your business’s risk profile.

Can I have multiple Merchant Cash Advances simultaneously?

While having multiple advances is possible, it’s generally not recommended as it can strain your cash flow. Most merchant cash advance providers prefer you to complete one advance before taking another. Credit card transactions/credit card payments for small businesses are also treated as eligible revenue.

How does a Merchant Cash Advance affect my business’s credit score?

The  Merchant Cash Advance  MCA  typically don’t impact your personal or business credit score as they’re not reported to credit bureaus as a business loan usually would be . However, some lenders may perform a soft credit check when businesses apply for a merchant cash advance online.

Is there a maximum amount I can receive through a Merchant Cash Advance?

Maximum amounts vary by lender but are usually based on your average monthly credit card sales. Some providers offer advances up to $500,000 or more for qualifying businesses.

Can I pay off a Merchant Cash Advance early to save on fees?

Early payoff options vary by lender. Some may offer discounts for early repayment, while others may charge the full fee regardless of how quickly you repay the advance.

What distinguishes Merchant Cash Advance Funding from traditional bank loans?

Merchant Cash Advances differ from bank loans by offering quicker approvals, more flexible qualifications, and repayment based on future sales rather than fixed monthly payments. They’re typically easier to obtain but may have higher overall costs.

How do lenders determine the amount of a Merchant Cash Advance?

Lenders assess your business’s average monthly credit card sales, typically looking at the past 4-6 months. Depending on your business's stability and growth potential, they usually offer advances ranging from 50% to 250% of your average monthly sales.

What are the primary advantages of choosing Merchant Cash Advance Funding?

The main benefits include rapid access to capital, flexible repayment terms aligned with your sales, no collateral requirements, and higher approval rates for businesses that might not qualify for traditional loans. This funding option can be precious for managing cash flow gaps or capitalizing on growth opportunities.

How can I estimate repayment amounts for a Merchant Cash Advance?

You can use a merchant cash advance calculator to estimate repayment amounts by entering the borrowed amount and the factor rate. This tool helps you understand the total repayment and plan your finances accordingly.