Merchant Cash AdvanceIs it right for your business?

What is a Merchant Cash Advance?

What is a Merchant Cash Advance?

A merchant cash advance is working capital given by a private provider to a business based upon its future sales.

MCA VS Bank Loan

MCA VS Bank Loan

MCA VS. Bank Loan

Advance on Future Sales Money lent based on cashflow and/or collateral

Factor Rate Funds lent at a fixed rate of interest

Amount of Advance Limited by future sales Loan Amount may be much greater than an Advance

Unregulated Industry Highly Regulated

Application and approval processing is quick and easy.

Application process is usually lengthy and high decline rates

High approval ratesMuch lower approval rates. 60% of bank loans declined

Bad Credit = Approvals Bad credit = Decline

No personal Gurantee May require personal guarantee

No fixed repayment amount Fixed repayment amount

No fixed repayment terms Fixed Repayment Term

Will not show on credit report Will show on your credit report

Fees are tax deductible Fees are deductible

The Top Funded Industries

Top 10 Most Funded Industries 2nd Qt 2011

The Top Funded Industries

How does Merchant Cash Advance Work?

Application Process

Funding—72 Hours or less

Factor Rate 1.25–1.35

Payback 6–9 months

Daily Retrieval Rate 5%–20% +

Credit Card Processing—split funding

ACH withdrawals

Lockbox—Split funding

Strategic Uses of Merchant Cash Advance

Strategic Uses of Merchant Cash Advance

Defined use of the funds

Growth or expansion are the best uses of the funds

Compare the Internal Rate of Return

Negotiate for the lowest possible daily retrieval rate

Negotiate for the longest possible payback period

Don’t Put It On The Credit Card

Merchant cash advances are expensive, but large credit card purchases will cost you more

Credit Card

Factor Rate Cost to Company1.20 2,000$ 1.25 2,500$ 1.30 3,000$ 1.35 3,500$ 1.40 4,000$ 1.45 4,500$

Interest Rate Cost to Company15% 8,861.66$ 16% 9,537.42$ 17% 10,222.15$ 18% 10,915.53$ 19% 11,617.30$ 20% 12,327.15$

Top 10 Most Funded Industries 2nd Qt 2011

Merchant Cash Advance Pitfalls

What to Avoid

High Daily Retrieval Rates

Adjustable daily retrieval rates

Short Payback Periods

Dogpiling

Switching credit card processors

How to Find a Reputable Merchant Cash Advance Company

Know your merchant cash advance company- Honesty Integrity and Intelligence

Full Disclosure—No hidden fees or adjustable rates

Excellent Customer Service—courteous

Get Multiple Quotes through Blindbid

Merchant Cash AdvanceIs it right for your business?