Merchant cash advance funding: How does it work?

Merchant cash advance funding: How does it work?

Merchant cash advance can be defied as the amount of money which is obtained by the small business to get rid of a financial crisis. The merchant cash advance cannot be termed as a loan but it is more of an advance payment which is transferred to the account of the business owned in regular intervals. Before opting for the merchant cash advance you should get an idea about how merchant cash advance works.

how merchant cash advance works

How MCA is Granted?

The merchant cash advance is granted in the basis of the future revenues and the sales of the business. By applying for MCA a small business can easily get funds transferred to their account. Before the MCA is granted, the lenders evaluate the risks and the other factors closely. The method of scrutiny of the MCA lenders is quite different from the traditional methods. The MCA lenders check out the daily debit card receipts in order to find out whether the business would be able to pay back the amount.  Before applying for MCA, you should be well aware about how merchant cash advance process works!

How Does MCA Work?

An agreement is signed between the MCA lender and the small business and the advance amount, holdback percentage and repay amount are discussed. As soon as the agreement is made, the advance is transferred into the bank account of the small business owner. Everyday a pre-decided percentage is debited from the daily revenue of the business. If the business is able to do more business, the loan will be paid back quickly. In case the transaction on a particular day is less, the amount which is withdrawn from the account of the business owner will be less. Only after having a clear idea about how merchant cash advance works, you should apply for the advance.


According to the MCA lenders, the business which uses MCA might payback twenty to forty percent of the amount which is borrowed. The percentage is usually displayed as the factor rate. There is a slight difference between the holdback amount which is paid by a small business and the repayment of the entire advance amount.


Holdback Amount Depends On

The holdback amount depends on the amount of funds which is received by the business. it also depends on how long it would take to pay the advance amount and on the size of the monthly receivables.

merchant cash advance loans

Is MCA Beneficial for Your Business?

When a business needs to obtain capital quickly, the business owners opt for merchant loan advance. It is highly beneficial to opt for MCA because the credit requirements for MCA are quite low.

Process of Application 

The process of application for MCA is quite simple. The time taken to obtain the money might vary from two hours to two days depending on the MCA lender and his efficiency. As soon as the application is approved, the funds are transferred into the account of the business owner within two business days. The application procedure of MCA is not as complicated as that of a traditional loan and hence it is quite popular.