The merchant cash advance is a popular form of alternative financing among business owners who need quick access to cash. To apply for a merchant cash advance, you complete an application and submit it along with the documents the lender requested. This usually includes several months of credit card statements for your business at a minimum.

Lenders who offer the merchant cash advance as a financing option establish repayment by receiving a small percentage of your company’s credit card receipts each day by automatic clearing house (ACH) deposit. Because repayment is a percentage, it allows you to pay more when sales volume is high and less when it’s lower. The higher your credit score, the more likely it is you will receive the most favorable repayment terms. We recommend obtaining a copy of your report several weeks before you plan to apply so you know your credit score and can correct any mistakes on the report.

Have a Plan for How to Use Funds from the Merchant Cash Advance

While a merchant cash advance can come in handy when you’re experiencing a cash flow pinch, you shouldn’t come to rely on it as a regular source of revenue. This is one reason why knowing how much you want to borrow and having a budget for it before you accept proceeds from the advance is so important.

Decide if This Alternative Payment Method is Right for Your Industry

The industries that typically benefit the most from a merchant cash advance tend to be retail, restaurants, and service businesses because they receive daily revenue from credit card sales. It is always a good idea to review credit card sales from the past several months before applying for an advance. This will give you an idea of your average daily revenue to ensure that you can manage repaying the funds as expected.

Is the merchant cash advance right for your company? Find out by contacting Overhead Capital Ltd. with additional questions or to complete an application.