Pros and Cons of an MCA
Needing fast cash is an unfortunate problem for a lot of small businesses. Before signing up for a merchant cash advance with a lender, going over the pros and cons will give you a better idea of what you’re in for.
Pros
The biggest benefit of an MCA is quickly getting the money in hand that you need for your business. If you have a project or an improvement that you want to make in your small business and need money to make it happen, a merchant cash advance can be a way to acquire the money needed to do so.
Unlike a loan, you don’t need to have collateral to back up the loan. You also don’t need to worry too much about your credit score. And although the lender will pull your credit score, MCAs tend to be more forgiving for businesses with mediocre or bad credit.
A lender will be able to give you more flexible payment options as well. If you’re going through a slow sales period, you could readjust the daily holdback of your transactions as well.
Cons
Since there is a factor added to the payback amount for a merchant cash advance, if you’re in a period of lower sales, the higher payback amount could be untimely. The extra cost of paying back the merchant cash advance may diminsh profitability to some degree.
Since MCAs aren’t regulated, the factor on top of the payback account tends to be higher than the interest of a traditional bank loan. The payback period will generally be shorter than a loan.
Who an MCA Is Best For
A merchant cash advance is best for a small business that needs some extra money to get its business to be more competitive and generally more functional. Not all small businesses can get bank loans to do all of the things they want to do. A merchant cash advance can also assist with cash flow to pay and consolidate debt.
An MCA is not great for a business that had a major disaster that completely shut down business operations. Looking for assistance in the form of a traditional bank loan or a grant will be better than an MCA because they don’t expect you to continue daily transactions in order to pay them back. The MCA is a good idea for a small business that wants to make non-interrupting upgrades.
Alternatives to MCAs
If your business doesn’t qualify for an MCA for any reason, you still have options available to you. One alternative is a high-risk merchant account, which is popular with companies that aren’t able to secure financing through traditional means. At Capital Biz Solutions, we have access to multiple MCA lenders. We always negotiate better terms for our clients; as we deal directly with underwriters through our advisory staff. You may have stacked MCAs that we can refinance into one loan for a much better payment. We want to ensure that an MCA is the proper lending facility at the time of your application. If it is not, we will recommend other types of loan facilities that we believe are a better solution. We ask that you take advantage of our 60 and 90-minute consultations at no cost. Please visit us on the web at https://www.capitalbizsolutions.com/ or simply call us at 508 864 7758. We look forward to assisting you grow your business now, and in the future.
