The Benefits of a Merchant Cash Advance

March 18, 2021

The Benefits of a Merchant Cash Advance

The difficulty of obtaining a bank loan has led many small business owners to seek a funding alternative. A merchant cash advance (MCA) is a credible, fast, and easy way for a merchant to obtain working capital for just about any business need, including POS systems and software, new equipment, inventory, emergencies, repairs, and even operational costs. Here is a look at how a merchant cash advance works and the many benefits to SMBs.


Fewer Requirements

Because of complicated requirements and paperwork, bank loans can take weeks or months for approval. Since applying for an MCA focuses more on sales track record than credit rating or collateral, the application and approval process is much quicker than a traditional loan, enabling merchants to seize opportunities as they present themselves.

An MCA is also one of a few sources of financing available to brand-new, bad-credit, or otherwise, struggling businesses excluded from the traditional lending market. A merchant cash advance can also benefit companies that are thriving and looking to grow or expand. The flexibility of how a merchant can use the money is far greater with an MCA than with a bank loan.


Simple Application Process and Fast Approval

Going through a lengthy application process only to be turned down can be crippling to a small business. The chances of being approved for a merchant cash advance tend to be higher. The Federal Reserve's Small Business Credit Survey found that 79% of businesses that applied for an MCA were approved, compared to 54% approved for an SBA loan or line of credit, and only 50% approved for a personal loan.


Flexible and Fast Repayment Terms

Traditional bank loans come with extremely long fixed repayment terms, which can weigh heavily on a business. A merchant cash advance is a business loan alternative. It’s a purchase of a portion of future credit card sales. Repayment is flexible. It’s a small deduction from daily credit card sales, and it adjusts to sales volume.  When the sales day is slower, the payment will be lower, allowing business owners to meet obligations without jeopardizing their repayment.

This model enables merchants to better manage their finances while leaving enough working capital to continue investing in their business.

The intuitive nature of repayment makes it easy to manage -- no confusing statements or due dates to remember. The shorter time period and the automation of payments make it possible for providers to offer advances to those with less than perfect credit if their sales track records are good. Business cash advances are easy to keep organized and lower your risk of accounting errors.

Even though payments are flexible, it takes less than a year to repay most advances. Once repaid, the business should generate more profit, which will be available to reinvest in the company or cover living expenses. Bank loans can span multiple years or even decades, which can be a tremendous burden to small business owners.

A loan may seem like a more useful financial tool, but business cash advances offer many benefits to business owners looking for a fast, easy way to obtain working capital. Loans tend to be more limiting and cost every bit as much as an advance fee because of the extended repayment period.

For small businesses who need a fast and efficient way to fund their business initiatives, a merchant cash advance is a great choice. 

  • Serena Smith is Director of Partner Development for Quikstone Capital Solutions. 

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About Quikstone Capital Solutions - For the past fifteen years, Quikstone has provided hundreds of millions of dollars in business funding to over 10,000 merchants across the country.  Today, Quikstone remains a leader in the industry with a reputation for honesty, transparency, and a commitment to the highest level of service.

Serena Smith
Director of Partner Development
Quikstone Capital Solutions