Interestingly enough, a merchant cash advance is one of the most commonly utilized forms of business financing within certain trade industries – while they still remain foreign to others. When it comes down to it, any and every business owner – at one time or another – could find it much more advantageous to spring for a merchant cash advance rather than traditional bank loans. So, how do you apply for a merchant cash advance? Let’s get you some basics …
What is a Merchant Cash Advance?
Alternative lending products such as term loans or merchant cash advances, also known as MCA loans, are revenue-based lending programs. Geared towards individual small business needs, merchant cash advances do not require you to disclose the loan proceeds budget – meaning, you can spend the capital as you need to on whatever you may need to.
Revenue-based lending rates your creditworthiness on your future receivables. A direct relationship between lender and merchant, this type of business funding is processed entirely through ACH transfers into the business bank account.
Prepping to Apply for a Merchant Cash Advance
Eligibility guidelines for an MCA loan are far less strict than those merchants are held to by traditional banks. As a general rule of thumb, to access capital through merchant cash advances, a business should be seasoned for more than a year, with a steady, consistent deposit history.
Gathering documents such as business bank statements that can help you provide accurate information on the business loan application the first time around. Applying for a merchant cash advance can conveniently be submitted online within a few minutes.
Applying for a Merchant Cash Advance
Completing the application for business funding should be done with focus, ensuring that all information requested is provided on the first shot. Very commonly business owners will forget to attach documentation that verifies information cited on the application – potentially causing a hold-up in approval or a pre-mature denial!
Another common error on the application is empty fields and information
listed in the wrong section. Why risk approval over frivolous mistakes? Double check everything on the business loan application is correct before submitting!
Be prepared to provide information such as:
- Basic business contact info
- Business ID & Licensing Information
- Business Owner contact information
- Banking Information
- Time in Business
- Monthly Bank Deposits
- The amount of funding needed
A helpful tip is to go through the application with a quick once-over before filling it out. This will give a clear idea of required criteria for applying for a merchant cash advance.
Business Loan Application Tips
Even if you’re in desperate need of capital, for several reasons, you should always stick to one lender! Managing multiple merchant cash advances simultaneously not only places your business at risk for budget-mismanagement, it can also place you in a less than desirable position when it comes to reconciling the books! Additionally, working with more than one loan could potentially slow up the approval process for all the loans, we know you don’t want that to happen!
Since you never quite know exactly when your business will require capital in the future, it is recommended to at least be aware of the basic things one could do to increase their approval chances, when and if the time arises.
- Try not to run negative. Business accounts may lapse at times, we get it, bills get crossed, payments get missed. However, if you want to take advantage of a merchant cash advance, you’ll need to make sure that your business bank account stays consistent and in the green!
- Know how to explain your inconsistencies. Certain industries may look inconsistent through a business bank account, but for good reason. You may have multiple accounts or utilize alternative processing methods. Instead of risking denial, streamline your banking or maintain verifiable paper trails as to where your business funds are deposited each month.
- Be aware of patterns in your account payables and receivables as it can help you ensure timely loan repayments without jeopardizing your budget. Most merchant cash advances provide daily, weekly or in certain cases monthly payment options.
- Be present. This type of business funding relies on expedited processing. As such, open and timely communication with your lender is vital from the application all the way to funding.
When looking for tips on how to apply for a merchant cash advance, the key is to compile as much information as possible about your options and your individual business goals. You’d be surprised how many business owners learn what they really want to achieve isn’t exactly what they’ve been working to achieve!