When most people think about obtaining some form of financing, a loan is often the first thing that comes to mind. And one of the drawbacks to taking on a loan is that it must be paid back incrementally, usually with interest. Wouldn’t it be great to obtain financing that doesn’t have to be paid back on a fixed schedule? In fact, there are some. One type is a merchant cash advance (MCA).
MCA’s: A Brief Description
An MCA is a special type of financing that gives your business an up-front, lump-sum payment for use in almost any way the business sees fit. Unlike a loan, which requires repayment in monthly or other periodic installments, an MCA is retired by taking a percentage of your business’s future credit card and debit card sales. Any widely used business credit card can work, whether it is Visa, AMEX, Mastercard, or another. The business owner does not have to pay anything until he or she generates sales.
Why an MCA Is Not a Loan
An MCA is not a loan because it’s actually a sale of future revenue. Because of that distinction, it’s not treated under the same rules and regulations that govern business loans. Many businesses prefer to use MCAs when they need to finance because there is no stress involved in the paying back of the money. Incremental payback occurs as the business makes sales. A small fraction of each sale is used to pay back the lender. Furthermore, MCAs do not require a lot of intrusive paperwork. A decision regarding approval is usually rendered by the lender in days.
If your business would like to learn more about MCA, contact Commercial One Group, we would be happy to help. Give them a call today and keep your business on track.