The Pros and Cons of Merchant Cash Advance

Do some research before using one of these services to solve your cash-flow problem
The Pros and Cons of Merchant Cash Advance

Small businesses need capital to grow; for any business to thrive, there are expenses that need to be paid, whether in the form of hiring new employees, buying new equipment, or investing in an online marketing consultation. But for many businesses, access to capital is hard to come by — which is why merchant cash advance services exist.

Merchant cash advance — sometimes called business cash advance — provides up-front money or capital in exchange for a percentage of future credit card purchases. It’s a relatively quick and straightforward way for companies to get their hands on some money, but, of course, it is not without some strings attached.

Qualifying for merchant cash advance
But why choose merchant cash advance over more conventional business loans? There are several potential reasons, but one of the big ones is that companies that may not qualify for conventional loans can qualify for merchant cash advance.

In particular, companies that have bad credit, or are simply too young to have much of a credit history at all, can find a solution here that they may not find elsewhere. The prerequisite, usually, is to show the merchant cash advance service some strong sales numbers: proof that your business really is gaining traction and has a future.

Do note a few stipulations, though: It is usually necessary to be in business for a certain span of time before you can qualify; that could be a year or it could be five, depending on the service you choose. Prior bankruptcies are usually disqualifying. And if you cannot process credit card payments, you’re likely out of luck.

Pros and cons of merchant cash advance
In short, merchant cash advance provides an avenue for capital to businesses that may have nowhere else to turn. But there are some other potential advantages, as well:

  • Compared to the lengthy processing periods for bank loans, merchant cash advance can generally get you your cash quickly.
  • Everything is done online, which means the paperwork requirements are typically minimal.
  • Repayment is based on a percentage, not a set amount, which can often be easier to handle.
  • Approval rates are high, and you don’t need perfect credit or collateral.

There are potential drawbacks, however. Sometimes, compared to bank loans, the interest rates will be higher, so make sure to review the repayment terms before you make a decision. There may also be some fees involved — again, a reason to check the paperwork.

Merchant cash advance is an unregulated industry. This may provide some business owners pause. What that means is you’ll want to do some research and make sure you work with a company that has a solid track record and a reputation for honesty.

Is merchant cash advance a good solution for your business? Potentially. There are pros and cons to consider, but for many companies it represents the only real path to amassing some capital.

About the Author
Amanda E. Clark is the president and editor-in-chief of Grammar Chic Inc., a full-service professional writing company. She is a published ghostwriter and editor, and currently under contract with literary agencies in Malibu, California, and Dublin, Ireland. Since founding Grammar Chic in 2008, Clark, along with her team of skilled professional writers, has offered expertise to clients in the creative, business and academic fields. The company accepts a wide range of projects and often engages in content and social media marketing, drafts resumes, press releases, Web content, marketing materials and ghostwritten creative pieces. Contact Clark at


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