All merchant cash advance providers understand that MCA leads won’t be interested in taking a loan from them unless they are convinced about the benefits. And, the way providers educate them makes all the difference in the sale.
Cash is the most essential requirement of every small or mid-sized business enterprise. It is used for making payments to employees, suppliers, inventory maintenance, and a number of other functions for business growth. As a result of recession, the credit market has tightened its rules, and in other words, most banks are incapable of providing businesses with cash advances. So, what should businesses do to fulfil this requirement? Go for a Merchant Cash Advance!
What is a Merchant Cash Advance?
A merchant cash advance is a substitute of business funding to those businessmen who do not have a good enough credit rating to secure a commercial loan from a banking institution. MCA funding is the purchase of a business’ future credit card sales at a discount. The business enterprise receives the cash advance from the MCA provider and benefits immediately from the extra cash flow to invest in the business. The MCA provider buys the right to receive a part of the business’ credit card sales every month—approximately 8% of the total receipts.
Advantages of MCAs
MCAs are a better alternative to regular commercial loans, and here’s why:
- No credit rating required – Unlike normal commercial loans, MCAs are a safe approach to accessing cash. This is because it is a sales transaction. Hence, it stays off of credit reports. Where there is a risk of losing collateral in a normal commercial loan, there is no such risk involved with an MCA.
- Uncomplicated application and collection – An MCA funding is a simple and smooth process from beginning to end. Where normal commercial loan lenders evaluate the amount, financial statements, interest rates, and credit ratings, an MCA provider only looks after monthly credit card returns and time in business. Typically, $5000 in monthly credit card sales and 9 months in business are minimal.
- Quick access to cash – Receiving cash in the case of an MCA is less time consuming than normal commercial loans. In the case of a normal commercial loan, a time period of weeks or sometimes a month is required. But in the case of an MCA loan, the cash comes in hand within a week of submitting the application. Such an instant response works as an asset for you if you are in urgent need of cash to fix inventory or seize an opportunity.
- High approval rate – An MCA provider evaluates the actual business performance, rather than the credit score, to choose applicants. This methodology allows any stable business to be eligible for applying for the loan. The advance amount is decided on the basis of the monthly income of the business in the previous year.
- Revenue-based collections – A commercial loan requires a monthly instalment of a fixed amount, and it cannot be changed. But in the case of an MCA, the collection amount fluctuates on the basis of sales volume. Meaning the higher the sales, the higher the deposit and vice versa. This way, MCA funding supports an enterprise financially rather than leaving them with an empty pocket at the end.
When thinking of long-term, low-interest business funding, traditional loans are the best option. But when you are looking for something quicker, and a safer cash infusion, a MCA is the best option. MCAs collect an amount from you on the basis of your monthly sales volume. Therefore, it is a very flexible method of procuring loans during all ups and downs of business operations. With a handy list of MCA leads, MCA providers can improve their chances of converting leads by educating them on the benefits.