Commercial Real Estate Financing
What Is a Merchant Cash Advance?
First off, it isn’t a loan. There’s no interest rate and you won’t see it in your balance sheet as financial debt.
The unique arrangement with this type of funding is that you’re leveraging the future earnings of your business to connect with capital in the short-term. The maximum funding amount usually tops out at $1,000,000, which you’ll repay over a term lasting between 4 and 18 months.
How exactly do you repay your revenue advance? Repayment is made by either a fixed dollar amount or a fixed percentage of your credit card deposits paid to the funder via ACH debit. This is generally done on a daily or weekly basis.
There is no collateral required for a cash advance, which is a huge benefit. Also, they can help you build business credit. Be sure to work with your accountant to get the full tax benefit—you can usually deduct the difference between the amount you received and the amount of your future sales.