Many small business owners are interested in acquiring an upfront sum of cash that can be used for cash flow purposes, or to help grow their businesses. A merchant cash advance will satisfy this need, and can be repaid based on your future credit card sales. Here are some of the most frequently asked questions about merchant cash advances.
Q: Is a MCA a Loan?
A: Technically, an MCA is not a loan. An alternative lender would purchase some percentage of your future credit card sales in exchange for the upfront sum of cash. To repay this amount, some percentage of daily credit card sales would be deducted by the lender automatically.
Q: How Much Funding Can Be Supplied Through an MCA?
A: Funding amounts can vary considerably from one business to another, but typically it would be possible to receive anywhere from $5000-$250,000. All borrowers would be evaluated on their own merits.
Q: What Percentage of Credit Card Sales Get Deducted?
A: All deductions will be based on a fixed percentage of daily credit card sales, which means the amount actually deducted will be different every day. If you have a slow day of sales, a smaller amount would be deducted, and when you have a spike in sales, a larger amount would be deducted.
Q: How Can I Tell if an MCA is Right for my Small Business?
A: It will be possible to analyze the return to your business when considering the total cost of your investment. If you are calculating the short-term ROI, you can use the formula ROI = net profit/total investment cost X 100. This will tell you whether or not it’s worth your while to get an MCA, because you’ll know exactly what your return is.
Got Questions About a Merchant Cash Advance?
Contact us at Hornet Capital Solutions if you have any questions about how a merchant cash advance works. We’ll be glad to answer any queries you may have, and discuss arranging a merchant cash advance for your small business.