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What is a Merchant Cash Advance (MCA)?
A merchant cash advance is a purchase of your future receivables at a discounted rate. You get the capital up front. You receive cash in exchange for a fixed dollar amount of your future sales. A merchant cash advance provides alternative financing to a traditional small-business loan. Merchant cash advance providers say their financing product is not technically a loan. An MCA provider gives you an upfront sum of cash in exchange for a slice of your future sales.
How Merchant Cash Advances (MCA) Work…
A merchant cash advance has historically been for businesses whose revenue comes primarily from credit and debit card sales, such as restaurants or retail shops. Now, merchant cash advances are available to other businesses that don’t rely heavily on credit card or debit card sales.
Merchant Cash Advance (MCA) repayments can be structured in two ways…
You can get an upfront sum of cash in exchange for a slice of your future credit and debit card sales, or you can get upfront cash that is repaid by remitting fixed daily or weekly debits from your bank account, known as ACH, for Automated Clearing House withdrawals.
Unlike the repayment structure tied to credit card or debit sales, your payment does not fluctuate with your sales. That means you’ll pay the same amount regardless of whether sales are down or up. For convenience an MCA can also be attached to your credit card sales. At the end of every day, an automated process can retrieve a small fixed percentage of your daily transactions until your advance is paid off.
For example; a business with $100,000 in monthly revenue would owe $333 per day or $2,331 per week based on a percentage of sales of 10%.
What is a consolidation?
When a business owner has taken multiple MCA’s and has to manage the payments individually for all the MCA’s, a consolidation is highly beneficial as the consolidation company will provide enough capital to pay off the other balances as well as leave the business owner with additional capital to use to grow their business. Typically, the single daily payment amount will be more manageable as the term of the consolidation MCA is extended.
Our providers offer different types of consolidation programs such as standard consolidation and incremental consolidation programs. The programs differ by the amount of funding you would receive on top of that needed to pay off existing balances, the frequency that you would receive portions of the funds and some other factors.
Who should apply for a consolidation?
Merchants who are looking to consolidate current multiply MCA’s into one lower daily payment.
How does incremental consolidation work?
Funds are deposited into the merchant’s account incrementally each week to cover their MCA payments for the week. In other words, the money is given to the merchant in portions every week until the other MCA positions are paid off. The merchant is not forced into defaulting which is often the case when looking at MCA relief programs. Defaulting damages your credit record and makes it very difficult to acquire financing again.
Types of Business Financing That We Offer Through Our Lending Partners…
– Merchant Cash Advance Solutions – Lender buys a small percentage of future credit card sales and advances you the money.
– Unsecured Small Business Loans – No credit card merchant account required. Calculated based on monthly revenue/sales.
– Asset Based Lending – These loans or lines of credit are secured by inventory, accounts receivable other assets.
– Factoring – These loans involve a factor who provides financing to the seller of the accounts in the form of an advance.
Payment Processing/ Merchant Accounts
What is a Merchant Account? Here’s where the merchant account comes in…
A merchant account is what allows businesses to accept cashless forms of payment. This includes credit cards, debit cards, and mobile wallets such as Google Pay or Apple Pay. So, whether you want to take card payments online, over the phone, or from your physical store with a card machine, you’ll need a merchant account to do it.
After the customer pays, the funds leave their checking account and enter your merchant account. This is operated by your merchant account provider – basically, the bank or independent company (aka: ISOs) that provides your merchant services. The funds sit there for a couple of business days (usually) before being deposited into your (entirely separate) business account, where you’ll have access to them.
What are Merchant Services, and Who Offers Them?
The term ‘merchant services’ (also known as credit card processing – the term used more frequently refers to the act of accepting cashless payments. You can secure merchant services via a few different routes, including:
Why Should You Get a Merchant Account?
Credit cards and debit cards have been around for ages – anyone can tell you that. But what fewer people know is that cashless transactions have been growing year-on-year in the US (and around the world) for some time… in their billions.
What does this mean for you, exactly? Well, it’s a harsh reminder that a new way of paying is taking over; and it’s time to adapt, or risk being left behind. Because if you can’t offer your customers the opportunity to pay with a card, they’ll go somewhere that will.
What is a Point of Sale System (POS)?
Point of sale (POS) systems enable businesses to process transactions. Whether you’re in the restaurant, hotel, or retail industry, your business wouldn’t ever sell a thing without them, as they help turn your simple cash register into an entire hub of business management.
What is the difference between POS and EPOS?
POS (point of sale) is the hardware you use to sell products, namely the traditional cash registers you see in most shops. An EPOS (electronic point of sale) is a type of POS system powered by the internet, combining software and hardware that’s managed from a single, digital platform.
EPOS comes with an online interface that can normally be accessed via tablet, mobile, or desktop. These days, however, modern POS systems are now generally referred to as EPOS systems.