Things You Need to Know About Merchant Cash Advance 

When you own a business, merchant cash advance services will be a great help for you. There will always be a time when you would be needing a cash assistance to continue your business activities. Of course, it would be a waste to just let everything you built die out together with your investment. But what is merchant cash advances by the way? How do they work? Read through the article and find out how. 


Merchant cash advances enable you to leverage on your future credit card processing receivables to get a cash assistance. Once you have not received the cash from the lending company/service, the repayment starts as usual. In this process, the lending company has the authority to withhold the agreed-upon percentage of your credit card deposits.  

Some entrepreneurs or businesswomen/men tend to draw back with the idea of letting the lending company take the credit card receivables on a daily basis. It is important to take note, however, that the collection of credit card receivables is done on a percentage basis and not a lump sum. This entails that it adjusts to your condition: when your business is slow in progress, the lending company extracts less money; when your business is booming, it will extract larger money.  

In addition, most of the experts will never consider merchant cash advances as something similar to lending, but more of a sales transaction. This entails that the designation will never appear on a credit report as a traditional loan does.  

The following are the two methods of repayment you can do when you want to avail of a merchant cash advance: 

  • Lock-box repayment – this method redirects all your daily deposits to the account of the lending company/service, and also, you will be getting a share of the previous days’ deposits. This method is an alternative to what we will have next.  
  • Split withholding repayment – this method is more common than the first we mentioned before, and one of the most popular methods used in different states. In this way of repayment, the lender or lending company is permitted and authorized to obtain the agreed-upon percentage from your revenue on a daily basis.  

While loans have limits with regards to the usage of cash, a merchant cash advance will never provide any restrictions when it comes to usage. It has the flexibility that does not come with more focused forms of financing. This is completely convenient compared to business acquisition loans or equipment financing. Whether you need to purchase a new truck, hire a new receptionist, repair the whole office, or build a new business, a merchant cash advance will be a very convenient tool for you. It will not give you the same hassles that you can experience with other cash loans or cash assistance.  

Some experts will never recommend this method as this does not always guarantee credibility because of the scams that have been happening. This is the very reason why you need to find a reputable company/service that you can trust with your credit card receivables. Merchant cash advances are very convenient and advantageous; you just need to find the right company.