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    Merchant Cash Advance Loans to Grow Your Small Business

    We’ll get you the best merchant cash advance financing with flexible terms to suit any business.

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        Business LoansMerchant Cash Advance
        Unsecured Funds Unsecured Funds No personal guarantee &
        no collateral required*
        Quick Funding Quick Funding Get funded within
        a few business days
        Simple & Easy Simple & Easy Past credit issues may
        NOT be a problem
        Fast Approvals Fast Approvals Within 24 hours of
        application

        What our clients are saying:

        5 Star

        5 Star

        Rating on TrustPilot

        Unsecured Funds Unsecured Funds No personal guarantee &
        no collateral required*
        Quick Funding Quick Funding Get funded within
        a few business days
        Simple & Easy Simple & Easy Past credit issues may
        NOT be a problem
        Fast Approvals Fast Approvals Within 24 hours of
        application

        Intro To Merchant Cash Advances

        If you need cash for your business right away, a Merchant Cash Advance could be what you’re looking for. This type of financing is one of the most easily accessible. Typical requirements like excellent credit or overflowing financial statements aren’t mandatory for eligibility.

        Payments aren’t fixed, so you only pay what your cash flow can bear each month. And though it’s geared towards short-term initiatives, a Merchant Cash Advance doesn’t become more expensive if business slows down for a little while. This makes a Merchant Cash Advance very ideal for businesses that would struggle with the fixed monthly payments of traditional loans.

        In this guide, we’ll answer the following questions and more:

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          What Is a Merchant Cash Advance?

          A Merchant Cash Advance (MCA) is sometimes referred to as “Credit Card Factoring” or a “Credit Card Processing Loan.” You receive a lump sum that gets paid back via a fixed percentage of future debit and credit card sales (Holdback Rate). Payments are automatically deducted each day, and the size of your payments fluctuates with your debit and credit card sales volume.

          An MCA is not as challenging to qualify for as other business loans, so business owners with little collateral, history in business, or a low credit score may benefit from this option. The amount of funding your business qualifies for depends on the amount of credit card receivables, or the sales you make to customers who pay using a credit card.

          With this kind of arrangement, you agree to receive a lump sum of your future credit card sales immediately from the lender instead of waiting weeks/months to get the full amount from the credit card processing company. This is known as an “advance.”

          Funding Amount Funding Amount $7.5K – $1M
          Funding Term Funding Term 3-18 months
          Rates Rates Starting at 1.09
          Speed Speed 1-2 Business days

           

          How Does a Merchant Cash Advance Work?

          The size of your borrowing amount depends primarily on your previous debit and credit card sales. This is the main criterion for eligibility in general. As long as you have strong debit and credit card sales, poor credit or rocky cash flow probably won’t prevent you from qualifying.

          However, your credit score and cash flow do impact several other elements of your Merchant Cash Advance. This includes the fixed percentage of daily or monthly sales that gets deducted, which is called your “holdback rate.” Typical holdback rates run between 8% and 15% of daily sales.

          Instead of interest, each borrower is assigned a factor rate. This determines the total amount you’re going to repay to the lender. Factor rates typically range from 1.09 to 1.5.

          Example of a Merchant Cash Advance:

          For example, let’s say you borrow $50,000 with a factor rate of 1.4. This means you’d owe $70,000 in total. The business lender deducts 10% of your debit and credit card sales each time you batch out. In the first month, you generate $100,000 in credit card transactions. Based on your percentage, you’d pay $333 per day to pay back $10,000 for the month. In the second month, your sales drop to $70,000. Since the holdback percentage never changes, your daily payments would drop to $233.

          Like other forms of short-term financing, a Merchant Cash Advance is designed to be paid back as soon as possible. However, the total cost decreases when your payments are more spread out as a result of slow sales.

          Merchant Cash Advances – Research, Facts & Reports

          Almost 64% of small businesses in America still deal with financing challenges including managing operating expenses, access to credit, and issues making debt payments. Source: Small Business Credit Survey: 2019 Report on Employer Firms

          Online lending continues to grow. Morgan Stanley forecasts that by the end of 2020, online lenders/fintech companies will lend small businesses $47 billion. That’s 16% of the total small and midsize business credit approvals. Source: National Community Reinvestment Coalition

          Debit and credit card payments increased 8.9% each year between 2015 and 2018 and ACH (Automated Clearing House) payments grew by 6% annually each year from 2015 through 2018. Source: 2019 Federal Reserve Payments Study: Initial Data Release

          What Are The Advantages of Merchant Cash Advances?

          Fewer products are easier to qualify for than a Merchant Cash Advance. If you have subpar credit, rocky cash flow, and less than one year in business, this may be the only way to get the funding you need. And since the requirements are so loose, you can get approved in under 24 hours.

          The repayment structure for a Merchant Cash Advance is particularly advantageous for highly seasonal businesses or businesses that experience occasional dips in revenue. Slow months mean smaller payments, as opposed to paying the same amount each month, regardless of how well your business is doing. A seasonal business could theoretically use the funds during the slow season and pay off a good chunk of the loan during the busy season, even if the two periods are three or four months apart. When sales start to drop again after the busy season, you don’t have to worry about making the same size payments as before.

          This scenario is ideal for a Merchant Cash Advance because your payments would fluctuate and be more spread out.

          For example, let’s say you borrowed $100,000 with a factor rate of 1.3. This puts your principle at $130,000. If you paid off the entire loan in six months, your APR would be at least 60%. If you paid off the advance in twelve months, your APR would likely be closer to 30%.

          What Are The Disadvantages of Merchant Cash Advances?

          Loose requirements come with a cost. Borrowers with subpar credit and rocky cash flow are statistically less likely to pay off the loan on time. For this reason, a Merchant Cash Advance is one of the most expensive business financing products on the market. Larger payments offset the heightened degree of risk placed upon the business lender.

          The size and frequency of your payments could also put tremendous pressure on your cash flow. You’d make large payments even if your sales remained strong for several months.

          Lastly, there’s no benefit to paying off the entire loan early. Unlike more traditional products, you have to pay a fixed amount of fees, regardless of when you pay off the loan. This differs from business loans with amortization schedules, where paying early allows you to save on interest.

          PROS

          • Get access to funds quickly
          • Approval process is easy
          • Less than perfect credit accepted
          • Use for a variety of business purposes

          CONS

          • Higher rates & fees than with traditional loans
          • May have to change merchant services provider
          • Shorter repayment term may reduce cash flow

          Merchant Account Loans Compared To Other Products

          Loan types Max Amounts Rates Speed
          Merchant Cash Advance $7.5k – $1m Starting at 1.09 1-2 business days
          SBA Loan $50k-$10m Starting at 5% 3-5 weeks
          Business Term Loan $10k to $5m Starting at 5% 1-3 business days
          Business Line of Credit $10k to $250k Starting at 8% 1-3 business days
          Receivables/Invoice Factoring $50k-$10m Starting at 5.8% 1-2 weeks
          Equipment Financing Up to $5m per piece Starting at 5% 3-10 business days
          Revenue Based Business Loans $10K – $5m Starting at 9% 1-3 business days

          Who Qualifies For Merchant Cash Advances?

          Approved businesses generally met the following criteria:

          Annual Revenue Annual Revenue $120K+
          Credit Score Credit Score 550+
          Time in Business Time in Business 4 months+

          How To Apply For a Merchant Cash Advance:

          You can borrow up to $1 million, with terms of up to 18 months. Here’s how to apply:

          Step 1: Consider Your Needs

          Before you begin the application process, take some time to make sure this is indeed the right product for your needs and circumstances. Will you be able to use the funds for your desired purpose? Will the repayment structure do more good than harm to your cash flow? Do you know exactly how much funding to request? Answering these questions ahead of time will make the rest of this process much easier.

          Step 2: Gather Your Documents

          The application requires the following documents and information:

          • Driver’s license
          • Voided business check
          • Bank statements from the past three months
          • Credit card processing statements from the past three months

          Step 3: Fill Out Application

          You can begin the application process by calling us or filling out our one-page online application. At this stage, you’ll be asked to enter the information from the previous section along with your desired funding amount.

          Step 4: Speak to a Representative

          Once you submit the application, a representative will reach out to you to explain the repayment structure, rates, and terms of your available options. This will ensure that there are no surprises or hidden fees during repayment.

          Step 5: Receive Approval

          The process generally takes a few business days and once you’ve been approved, funds should appear in your bank account in 1-2 business days.

          Your Merchant Processing Loan Gets Set Up – Now What?

          Your business loan isn’t just a way to get financing for your business. It’s also an excellent opportunity to start building (or improving) your credit.

          Regardless of the type of business loan you get, make all of your required payments on time and in full. If you get a business credit line or another form of revolving credit, keep your balance below the credit limit.

          Consistently making your business financing payments on time and in full will have a positive impact on your credit. And that means preferred rates and terms when you next need business financing.

          What If I’m Declined For a Merchant Cash Advance?

          If your merchant loan application gets declined, it might be because your cash flow cannot withstand the daily repayment structure. In this case, we recommend another product that puts less pressure on your cash flow and is easier to repay.

          If your business cannot afford to take on more debt at this time, we might also recommend a different financing tool. Possible examples include business credit cards or personal loans. Either option can help you build credit and will likely be easier to qualify for than business loans.

          If you were declined for poor credit, you should consider these credit repair services as well. They can help you boost your credit score by identifying the issues that are keeping your score down and creating a plan for eliminating them.

          Ready to take the next step and apply for
          Merchant Processing Loans?

          Apply Now

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            People Also Ask:

            What Is The Holdback Rate?

            An MCA is repaid to the funder by taking a cut of your daily credit card receipts. This cut is called the holdback rate, and typical holdback rates range from 5 to 12%.  So your restaurant does $5000 a day in credit card receipts, and you agreed to an 8% retrieval rate. The MCA funder automatically gets repaid $400. You get the other $4600 straight into your restaurant’s bank account.

            Because the fund transfer happens automatically between your credit card processor and your MCA funder, you never have to worry about late fees on your MCA. Since repayment doesn’t depend on your ability to pay on time, there’s nothing to report to a credit agency.

            Can I Get a Merchant Cash Advance With Bad Credit?

            MCAs are a valuable financing option for business owners with bad credit. It doesn’t rely on your ability to make timely payments. An MCA funder looks forward to your future credit card sales. The only backward look that interests an MCA funder is your most recent average inflow of credit card sales.

            An MCA funder will usually want to see at least your last six months of credit card volume. They want to see how much your business typically processes in credit cards.  This information helps the funder determine how much cash they’ll advance your business and under what terms.

            Can a Merchant Cash Advance Improve Your Credit Score?

            Unlike more traditional products, payments do not get reported to credit bureaus. This is because payments are made automatically via your business’s credit card processor. Hence, there’s no risk of falling behind on payments, since they require no manual effort on your part. This means that your payment history will have zero effect on your credit score.

            However, any form of financing can theoretically improve your credit score by helping you pay off existing debts. Poor credit often results from missed payments on loans, credit cards, etc. If existing debts are keeping your score down, a Merchant Cash Advance can be used to pay off what you owe. This is one of the most common purposes of short-term financing in general.

            Are Merchant Cash Advances For Failing Businesses?

            This is a huge misconception that originates from the product’s loose requirements. But the truth is, bad credit does not mean your business is failing. Many business owners have bad credit because they had no choice but to use personal credit cards to keep their business alive when they hit an early speed bump.

            Also, bad credit is far from the only reason to seek a Merchant Cash Advance. Since this product is not categorized as a “loan,” it does not show up as “debt” or a “liability” on your balance sheet. If you already have too many liabilities, adding another one could hurt your business credit score and make it difficult to obtain trade credit from vendors.

            How Much Can I Borrow With a Merchant Cash Advance?

            In most cases, you can borrow anywhere from 50% to as much as 150% of your average debit and credit card sales. This average is based on the past three months’ worth of data. However, more significant amounts can take slightly longer to appear in your bank account.

            When Is a Merchant Cash Advance a Good Idea?

            The number one requirement of a Merchant Cash Advance is strong debit and credit card sales. If at least 40% to 50% of your monthly revenue comes from these payment methods, you may be a good candidate for this product.

            Other forms of short-term financing tend to carry fixed, monthly payments. This is just fine if your weekly or monthly revenue is predictable and stable. These products are also cheaper if you pay them back as quickly as possible. Thus, a Merchant Cash Advance may be a better choice if your revenue is more tumultuous, and you need more time to pay off the loan in full. Neither of these circumstances would make the loan more expensive.

            Lastly, the accessibility of a Merchant Cash Advance isn’t affected by a lower borrowing amount. It might be more challenging to find a Business Line of Credit or Working Capital Loan for under $10,000. If you’re looking for a smaller amount and don’t want to take on unnecessary debt, a Merchant Cash Advance may be one of your only options.

            Can I Get a Merchant Cash Advance with Bad Credit?

            Yes, this product is available to borrowers with bad credit. Remember, your borrowing amount is based almost entirely on your monthly debit and credit card sales. And since the repayment structure of a Merchant Cash Advance is expensive by nature, borrowers are basically expected to have bad credit. However, your credit score will impact the product’s cost and terms. Thus, if you’re looking to access the lowest possible rates, consider our credit repair services before applying.

            Ready to take the next step and apply for
            Merchant Cash Advances?

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              How To Apply For Merchant Cash Advances
              Through United Capital Source

              Apply Online in a few minutes Apply Online in a few minutes Use our simple online application to submit a request for business funding. If you need any help along the way, just give us a call, chat or email.
              Talk to an expert advisor on funding options that best suit your business needs Talk to an expert advisor on funding options that best suit your business needs An expert, knowledgeable account executive will walk you through all the fine details and the requirements. This is to ensure you have all the info you need.
              Finalize the application and get the funds sent to your business bank account Finalize the application and get the funds sent to your business bank account Once your funding has been approved & closed, the lender sends the funds to your account so you can start using it to grow your business.
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