Navigating the world of business financing can be daunting, especially when seeking quick and flexible funding options. Merchant Cash Advances (MCAs) offer a unique solution tailored to businesses needing immediate capital.
However, with countless MCA companies vying for your attention, knowing which ones stand out is critical. In this blog post, we’ll dive into an extensive list of top-rated Merchant Cash Advance Companies that cater to diverse business needs and provide exceptional financial services.
- Merchant Cash Advances (MCAs) are a unique type of financing where lenders provide a lump sum payment to borrowers in return for a percentage of their future debit and credit card sales, making it an attractive option for businesses with fluctuating revenue.
- Some factors to consider when choosing a merchant cash advance company include credit score requirements, minimum monthly revenue, advance amounts, factor rates, interest rates, fees, repayment terms, application process and approval time, customer support, and online user reviews.
- Rapid Finance is one of the best options on the market due to its flexible repayment terms that collect only a percentage of your daily credit card sales until your advance is paid off; they offer fast funding – approvals and funds available in as little as 24 hours – making this an ideal solution for those looking to access capital quickly; and positive reviews from small business owners for their reliable service.
- Before deciding on any MCA provider or alternative loan options like equipment financing or invoice factoring, carefully evaluate each factor rate, repayment term, holdback rate, and eligibility requirement against your specific needs and financial circumstances.
What Is A Merchant Cash Advance?
Merchant cash advances (MCAs) are a type of financing where the lender provides a lump sum payment to the borrower in return for a percentage of their future debit and credit card sales, making it an attractive option for businesses with fluctuating revenue.
How Merchant Cash Advances Work
Merchant cash advances (MCAs) are a unique form of financing designed specifically for small businesses that process a significant volume of credit and debit card transactions.
The two main components of an MCA are the factor rate and the holdback rate. The factor rate is typically expressed as a decimal point figure (e.g., 1.14) which determines how much you’ll need to repay on top of the principal amount borrowed.
For example, if you receive an advance of $10,000 with a factor rate of 1.14, your total repayment amount will be $11,400 ($10,000 x 1.14). The holdback rate represents the percentage of daily credit card sales that will be withheld by the MCA provider to pay back your loan; it usually ranges from 8% to 15%.
One advantage MCAs offer over traditional loans is their speed—approval can take just hours while funding occurs within days—and flexibility since repayment adjusts according to your revenue stream, ensuring constant cash flow during slow periods without jeopardizing the financial health of your business.
Advantages And Disadvantages Of Merchant Cash Advances
Understanding the advantages and disadvantages of merchant cash advances is crucial in determining whether this financing option fits your business. Below is a table outlining the main pros and cons of merchant cash advances:
| Advantages | Disadvantages |
|---|---|
| Fast funding: Merchant cash advances can provide funds in as little as 24-48 hours, making them an ideal choice for businesses in need of quick capital. | High interest rates and fees: MCAs come with high costs, as their APR rates can exceed 200%, making them an expensive form of credit. |
| Low credit approval requirements: Businesses with low credit scores can still qualify for an MCA, as they generally have more lenient credit requirements than traditional loans. | Potential cycles of unpayable debt: Due to the high costs, some businesses may struggle to repay the MCA, leading to a cycle of debt and putting the business at risk. |
| Minimal documentation: MCAs often require less paperwork than other loan types, making the application process simpler and faster. | Short repayment terms: Merchant cash advances typically come with short repayment terms, which can be difficult for some businesses to manage and may lead to cash flow issues. |
Before deciding on a merchant cash advance, be sure to consider alternative loan options and weigh the potential risks and benefits of an MCA for your specific business situation.
How To Choose The Right Merchant Cash Advance Company
In this section, we’ll explore the factors to consider when selecting a merchant cash advance company and provide tips for determining your specific business needs – don’t miss out on crucial information that could save you time and money in the long run.
Factors To Consider
As a merchant seeking to find the right fit in a merchant cash advance company, it’s essential to evaluate various factors that can greatly impact your business’s financial well-being. Keep these important considerations in mind:
- Credit score requirements: Different MCA companies have varying credit score minimums, so make sure you meet their eligibility criteria before applying.
- Minimum monthly revenue: MCA providers typically require businesses to generate a certain amount of monthly revenue through credit and debit card sales; ensure your business meets this threshold.
- Advance amounts: Analyze the funding range various MCA companies offer to identify a provider that offers the appropriate amount for your needs.
- Factor rates: Examine each company’s factor rates as they significantly influence the cost of borrowing, with higher factor rates translating to more expensive loans.
- Interest rates and fees: Understand all associated costs, such as interest rates and fees, as these expenses contribute to the overall affordability of the MCA.
- Repayment terms: Assess each company’s repayment structures and terms, considering their daily or weekly retrieval rates and holdback percentages, which dictate how much your sales are withheld for repayments.
- Application process and approval time: Look for an MCA provider with a fast, streamlined application process that allows quick funds access when required.
- Customer support: Opt for a company with responsive customer support that’ll be able to address your concerns promptly throughout the loan term.
- Online user reviews: Evaluate online reviews from other merchants to gain insight into each company’s reputation and performance in providing MCAs.
- Perks and bonuses: Seek out additional incentives like prepayment discounts or loyalty discounts for repeat customers.
Considering these factors will help you select an MCA provider that best aligns with your unique business needs while minimizing potential risks associated with high-cost debt financing options like merchant cash advances.
Determining Your Needs
To choose the right merchant cash advance company, it is crucial to determine your needs and assess if an MCA is the best option for your business. Before applying for an MCA, closely examine your business financials, including cash flow projections and revenue history.
Determine how much funding you need and how soon you need it. Consider the repayment terms and factor rates offered by different lenders, as this can greatly impact overall costs.
It’s important to remember that MCAs are not ideal for every kind of business financing situation; however, plenty of alternative options are available depending on what works best for your specific needs.
Small businesses can opt for alternatives like lines of credit from banks or online lenders like National Business Capital or Liberty Lending Group. If you’re looking specifically to finance equipment purchases or upgrades, consider exploring equipment financing companies like Balboa Capital or CIT Equipment Finance instead.
Best Merchant Cash Advance Companies
The best merchant cash advance companies include Rapid Finance, CAN Capital, National Funding, Reliant Funding, and Kalamata Capital Group.
1. Rapid Finance
As a business owner, I know that finding the right financing option can be daunting. When it comes to merchant cash advances, Rapid Finance is one of the best options on the market.
With a factor rate starting at 1.09 and a credit score requirement of only 500, Rapid Finance offers up to $500,000 in funding for businesses with monthly revenues as low as $5,000.
But what sets Rapid Finance apart are their flexible repayment terms; instead of fixed monthly payments, they collect a percentage of your daily credit card sales until your advance is paid off.
This means you won’t be stuck paying back more than you can afford each month and will have more control over your cash flow.
Features
Rapid Finance is a merchant cash advance company offering small business funding solutions. They provide factor rates for their financing options, with starting rates as low as 35%.
One of the unique features of Rapid Finance is their online application process, which allows for fast funding. You can apply for funding in just minutes and receive your funds within days.
It’s worth noting that while Rapid Finance provides convenient and quick access to capital, merchant cash advance loans are based on future credit and debit card sales. This means that daily repayments will be taken directly out of your business’s earnings until the loan is paid off.
Pros & Cons
Rapid Finance is known for its quick approval process and flexible funding options. However, weighing the advantages and disadvantages before deciding if their merchant cash advance is the right fit for your business is essential.
| Pros | Cons |
|---|---|
| Fast approval and funding, usually within a few business days. | Interest rates and fees can be higher than other financing options. |
| Minimum credit score requirement of 500, making it accessible to businesses with less-than-stellar credit. | Requires a minimum of $5,000 in monthly revenue, which may exclude smaller businesses. |
| Applying for a merchant cash advance does not impact your credit score. | Repayment is based on a percentage of daily sales, which can be burdensome during slow periods. |
| Flexible funding amounts based on your business’s credit and debit card sales. | Terms and conditions can be complex, making it crucial to fully understand your repayment obligations. |
When considering a partnership with Rapid Finance, it’s vital to evaluate the pros and cons of their merchant cash advance offering to ensure it aligns with your business’s financial needs and goals.
2. CAN Capital
One of the top merchant cash advance companies on this list is CAN Capital. They offer short-term loans and merchant cash advances up to $250,000 with factor rates ranging from 1.15 to 1.48.
While CAN Capital may not have the fastest funding time out of all providers on this list, they have a reputation for excellent customer support and flexible qualification requirements that suit most businesses’ capabilities.
Features
CAN Capital is a reliable merchant cash advance company that offers short-term loans and funding with factor rates ranging from 1.15 to 1.48. This company has been in business since 1998, providing over $7 billion in funding to small businesses around the country.
With CAN Capital, borrowers can access up to $250,000 in financing options and pay back their advances through daily repayments within six to 18 months, depending on the terms of the agreement.
The company charges a $595 administrative fee on all MCA products but provides fast funding solutions within hours of application submission, making it a great choice for companies seeking immediate financial assistance such as software updates or inventory restocking.
Pros & Cons
As a merchant considering CAN Capital as a potential merchant cash advance provider, it’s important to weigh the pros and cons of their offerings. Here’s a breakdown of the advantages and drawbacks associated with CAN Capital:
| Pros | Cons |
|---|---|
| Low starting factor rates of 1.15 | High interest rates compared to traditional loan options |
| Minimum credit score requirement of 550+ | Potential for hidden fees |
| Minimum monthly revenue requirement of $4,500 | Not suitable for businesses with low sales or unpredictable revenue |
| Fast funding within 1-3 business days after approval | Short repayment terms ranging from 3 to 24 months |
| Option for borrowers with bad credit or young businesses | There may be better alternatives like bank loans, SBA loans, or crowdfunding options |
When evaluating your options, keep these factors in mind and consider whether CAN Capital’s merchant cash advance offerings align with your business’s specific needs and financial situation.
3. National Funding
National Funding is worth considering if you’re looking for a merchant cash advance company that offers quick funding with low credit score requirements.
However, it’s important to note that National Funding requires automatic daily repayments and applicants must have a minimum credit score of 500. To be eligible for an MCA from National Funding, businesses need to have been operating for at least a year and generate annual revenue of $100,000 or more.
Despite these criteria, the application process is straightforward and can lead to same-day funding once approved.
Features
National Funding is a reputable and reliable merchant cash advance company that has been in the business for over two decades. Small businesses looking for fast funding options with flexible repayment terms can find solace in National Funding’s services.
This lender offers merchant cash advances ranging from $5,000 to $500,000 with factor rates starting at 1.09.
What sets National Funding apart is their unique approach to determining eligibility based on the overall health of your business – not just credit scores. They consider factors such as revenue growth, profitability, and industry trends when evaluating your application.
The online application process for National Funding’s merchant cash advances is incredibly simple and straightforward.
Overall, National Funding offers a stress-free experience without any hidden fees or surprises along the way.
Pros & Cons
National Funding is a popular choice among merchants seeking cash advances, but it’s important to weigh the pros and cons before making a decision. Here’s a summary of the advantages and disadvantages of opting for a merchant cash advance from National Funding:
| Pros | Cons |
|---|---|
| Flexible repayment terms with no fixed payment schedule | Factor rates ranging between approximately 1.17 and 1.48 can make the cash advance expensive |
| No collateral required, making it easier for small businesses to qualify | Higher rates compared to traditional loans, with APRs routinely exceeding 200% |
| Fast approval and funding process, providing access to funds quickly | Merchant cash advances are unregulated, not subject to usury or banking laws |
| Applying for a merchant cash advance does not impact your credit score | Not the best option for businesses with stable cash flow or access to other financing options |
Going for a Merchant Cash Advance from National Funding can provide your business with quick access to funds without the need for collateral, but it comes with higher rates and potentially expensive repayment terms. Carefully consider the pros and cons and explore alternative financing options before choosing this cash advance provider.
4. Reliant Funding
Reliant Funding is one of the best merchant cash advance companies on the market for many reasons. They provide MCAs up to $400,000 with varying factor rates based on business qualifications.
Plus, Reliant Funding understands that small businesses might have unpredictable revenue streams and works with them to create flexible repayment terms. They also prioritize speed in funding and can deliver funds as quickly as 24 hours after approval.
Features
Reliant Funding is one of the industry’s leading merchant cash advance providers, offering personalized funding solutions to businesses across various industries. One of the standout features of Reliant Funding is their flexible payment options based on a business’s cash flow.
To qualify for Reliant Funding’s merchant cash advance, businesses need a minimum credit score requirement of 500+ with monthly revenue of at least $10,000.
In addition to their fast approvals (as little as 24 hours), Reliant Funding provides funding up to $250,000 without requiring any collateral. The application process is simple and completed online within minutes – providing much-needed support to small business owners without time or resources for long-winded loan applications.
Pros & Cons
Reliant Funding is a popular choice among merchants for their cash advance needs. We have compiled a list of the pros and cons of Reliant Funding to help you decide if they are the right fit for your business.
| Pros | Cons |
|---|---|
| Offers MCAs up to $400,000, enabling businesses to access a sizable amount of cash. | Expensive form of credit with high APR rates, which may create financial strain on your business. |
| Factor rates vary based on business qualifications, meaning that those with strong qualifications may receive more favorable rates. | Typical APR on a merchant cash advance ranges from 40% to more than 200%, which can be a significant cost for small businesses. |
| Provides the necessary funding quickly, allowing merchants to access the cash they need without delay. | It is crucial to use an MCA calculator to find the true costs of a merchant cash advance before applying, as unexpected costs can arise. |
| High levels of customer service ensure that merchants receive the support they need throughout the application and repayment process. | Small businesses should consider alternatives to merchant cash advances, such as traditional bank loans, SBA loans, or crowdfunding options, which may offer more favorable terms and conditions. |
When choosing a merchant cash advance provider, carefully weigh the advantages and disadvantages of each option and consider your business’s unique needs and financial situation.
5. Kalamata Capital Group
Kalamata Capital Group is a reputable merchant cash advance company that offers business owners financing with rates starting at 1.12 and advances of up to $500,000. To be eligible for Kalamata Capital Group’s merchant cash advance, you must have been in business for at least one year, have a credit score of 500 or more, and generate $250,000 or more in annual revenue.
They provide fast funding speeds to address your cash flow issues quickly. Their customer service team is responsive and helpful when it comes to answering questions about the application process or loan terms.
Features
Kalamata Capital Group is a popular merchant cash advance company that offers funding for businesses with at least one year of operation and $250,000 in annual revenue. With a factor rate starting at 1.12, Kalamata provides advances up to $500,000 to help cover unexpected expenses or support growth.
In addition to flexible lending options, Kalamata Capital Group prides itself on its quick application process and fast funding times. Business owners can quickly apply online by filling out a simple form, which includes basic information about their company’s financial health and credit score.
Once approved for funding through the straightforward qualification process, small business owners typically receive funds within just two days.
Pros & Cons
Kalamata Capital Group is popular among merchants for its various features and services. However, like all merchant cash advance providers, it has its own set of advantages and disadvantages that merchants should be aware of before making their decision.
| Pros | Cons |
|---|---|
| Fast funding process with same-day approval. | Expensive with high interest rates and fees, as is the case with most MCAs (Fact 5). |
| Flexible repayment terms based on a percentage of daily credit card sales. | Requires a minimum of $7,500 in monthly credit card sales, which may not be suitable for small businesses. |
| No collateral or personal guarantees required. | Restrictive eligibility criteria may make it difficult for some businesses to qualify. |
| Provides funding for a variety of purposes, including working capital, equipment financing, and inventory purchase. | Using an MCA calculator is recommended to find the true costs of a merchant cash advance with Kalamata Capital Group (Fact 6). |
Platform-Specific MCA Providers
Platform-specific MCA providers like Square Capital and PayPal Working Capital offer merchant cash advances to businesses that use their payment processing platforms, with varying factor rates and advance amounts available based on the business’s transaction history.
Square Capital
Square Capital is a popular MCA provider associated with merchant cash advance companies. It offers fast funding options tailored to businesses’ specific needs, including loans based on credit card sales and revenue-based financing.
One of the distinct advantages of Square Capital is its association with the payment processing company Square. This makes it an attractive option for small businesses that use Square as their primary payment processor since the company already has access to their sales data, making it easier to determine eligibility and factor rates.
However, like other MCAs, Square Capital comes with high APR rates ranging from 10% to over 200%, depending on several factors such as business age, credit score, and industry type.
Features
As a business owner using Square for payment processing, you can access Square Capital for your financing needs. With loan sizes ranging from $300 to $100,000, Square Capital offers merchant cash advances with factor rates that range between 1.1 and 1.16.
One of the main features of Square Capital is its eligibility requirements – it only requires one year in business with at least $10,000 in annual revenue and past credit card sales.
Square Loans also provides flexible repayment terms based on your daily sales percentage rate so there’s no need to worry about falling behind on payments during slower periods.
Pros & Cons
As a merchant, weighing the potential benefits and drawbacks of choosing Square Capital for your merchant cash advance needs is crucial. We’ve compiled a list of pros and cons to help you make an informed decision.
| Pros | Cons |
|---|---|
| Seamless application process, since it’s integrated with your Square account. | Only available to businesses using Square for payment processing. |
| No credit check required, as approval is based on your historical sales data. | High APR rates compared to other financing options. |
| Flexible repayment terms, with a percentage of daily sales being used to repay the advance. | Limited maximum loan amounts compared to other MCA providers. |
| No hidden fees or prepayment penalties. | Repayment terms can be unpredictable due to fluctuating sales volumes. |
| Quick access to funds, usually within one or two business days. | Not suitable for businesses with low credit card transaction volume. |
By considering these pros and cons, you can better determine if Square Capital is the right merchant cash advance provider for your business needs.
PayPal Working Capital
As an online merchant, you may be familiar with PayPal as a payment processor, but did you know that they also offer working capital loans? With PayPal Working Capital, eligible businesses can receive advances up to $97,000 or 35% of their annual PayPal sales.
One advantage of using PayPal Working Capital is the convenience factor – since they already have access to your transaction history and revenue data through your account.
Additionally, several platform-specific MCA providers are affiliated with the service (including CAN Capital, National Funding, Reliant Funding, Kalamata Capital Group), making finding alternative financing options easier.
However, it’s important to note that like other MCAs loan products on our list (such as Rapid Finance), interest rates and fees can be high depending on factors such as credit score and repayment terms.
Features
If you’re a merchant looking for financing options, PayPal Working Capital might be worth considering. This platform offers loans specifically to businesses with active PayPal accounts, allowing them to borrow up to 35% of their yearly sales made through the payment processing service.
PayPal Working Capital also offers flexible repayment terms based on your sales volume and cash flow. The repayments will be automatically taken out of your PayPal account rather than requiring manual payments each month.
However, keep in mind that loans from this provider come with a one-time fixed fee instead of an interest rate or factor rate like some other MCA companies.
Pros & Cons
PayPal Working Capital offers unique advantages and disadvantages to merchants seeking financing. Weigh your options by considering the following pros and cons:
| Pros | Cons |
|---|---|
| No credit check required | Fees can be high compared to traditional loans |
| Fast application and funding process | Financing is solely based on your PayPal sales |
| Simple pricing structure with no interest rates or hidden fees | Not suitable for businesses not using PayPal as a main platform |
| Automatic repayment deductions from future sales | Reliant on one platform for financing, limiting options |
| Accessible for businesses with poor credit | May not be a good fit for businesses with inconsistent PayPal sales |
Take the time to evaluate if PayPal Working Capital is the right choice for your business needs by considering these pros and cons alongside other financing options.
Merchant Cash Advance Alternatives
If you’re looking for alternatives to merchant cash advances, consider options like business lines of credit, invoice factoring, and equipment financing.
Business Lines Of Credit
As a business owner, you may want to explore other financing options besides merchant cash advances. One of the alternatives you can consider is a business line of credit.
Unlike MCAs, business lines of credit typically have lower interest rates and longer repayment terms. They are also more flexible since you only pay interest on the amount borrowed, not the entire credit limit like MCAs.
Overall, it’s important to weigh your options carefully before deciding on which funding source will benefit your business the most in terms of cost-effectiveness and flexibility.
Invoice Factoring
Invoice factoring could be an option if you’re looking for an alternative to a traditional merchant cash advance. Invoice factoring is when a company sells its unpaid invoices to a third-party financial institution at a discounted rate in exchange for immediate funding.
One advantage of invoice factoring is that it can help improve your business’s cash flow. Instead of waiting weeks or months for payment from clients, you can get paid immediately and reinvest that money into your business.
Additionally, since the financing is based on your invoices rather than your credit score, it may be easier to qualify compared to other types of loans.
Overall, while both merchant cash advances and invoice factoring offer quick access to capital, each has its own set of pros and cons depending on the needs and situation of your business.
Equipment Financing
Equipment financing is an alternative to merchant cash advances for businesses looking to purchase or lease equipment while maintaining cash flow. Equipment financing loans are typically secured against the equipment being purchased, making them a less risky option for lenders and often resulting in lower interest rates than merchant cash advances.
Fundera, one of the companies that offers reviews and comparisons for merchant cash advance companies, also provides equipment financing as one of their loan types. This type of funding can be particularly useful for startups or small businesses needing essential tools or machinery but struggling to finance the cost upfront.
Frequently Asked Questions (FAQs)
If you have questions about merchant cash advances, we’ve got answers! Check out our FAQs section for information on eligibility requirements, repayment terms and conditions, and more.
Qualifying For A Merchant Cash Advance
To qualify for a merchant cash advance, you typically need to have a steady stream of credit and debit card receivables. Most providers require that your business has been open for at least six months and generates a certain amount of monthly revenue.
It’s essential to consider how much funding you need before applying for a merchant cash advance as these loans tend to be expensive with high factor rates or fees. Some lenders may charge additional costs such as origination fees or prepayment penalties, so it’s crucial to read the fine print carefully.
Repayment Terms And Conditions
Repayment terms and conditions for merchant cash advances can vary from provider to provider. Typically, repayment is tied to the borrower’s credit and debit card receipts, with daily payments made until the advance is fully repaid.
It’s important to note that while merchant cash advances offer flexibility in repayment schedules, they come with high factor rates that can significantly increase the cost of borrowing.
Before applying for an MCA loan, it’s recommended that merchants use an MCA calculator to determine the true costs associated with this type of financing.
Our Takeaway
In conclusion, finding the right merchant cash advance company can be daunting for any business owner. However, with our list of top MCA providers and alternatives, you can make an informed decision based on your specific needs and financial circumstances.
Remember to carefully evaluate each factor rate, repayment term, holdback rate, and eligibility requirement before signing up for an MCA. While MCAs offer fast funding with few restrictions on use of funds, they come at a high cost in terms of APR rates that could ultimately harm your bottom line.
Instead, consider alternative financing options like equipment financing or invoice factoring that may better suit your unique business situation.
FAQs
What is a merchant cash advance?
A merchant cash advance is a type of financing in which a lender provides a lump sum of cash to a business in exchange for a percentage of its future sales.
Can any business apply for a merchant cash advance?
Typically, merchant cash advance providers require businesses to have a minimum of six months in business and a certain number of months of credit card sales.
What minimum credit score is required to qualify for a merchant cash advance?
Most lenders require a minimum credit score of 550 to qualify for a merchant cash advance, but some may require a score of 600 or higher.
How much funding can a business receive through a merchant cash advance?
The funding amounts for merchant cash advances vary depending on the lender and the business’s sales history, but typically range from $5,000 to $500,000.
What are some alternatives to merchant cash advances?
Some alternative financing options for businesses include traditional business loans, lines of credit, and invoice factoring.
What factors should be considered when choosing the best merchant cash advance provider?
When choosing a merchant cash advance provider, some factors to consider include the lender’s reputation, fees and rates, funding speed, and customer service.
What are the best merchant cash advance providers for 2023?
Some of the top merchant cash advance providers for 2023 include Libertas Funding, Reliant Funding, and National Business Capital.
Can businesses with bad credit qualify for a merchant cash advance?
Yes, some merchant cash advance lenders offer financing to businesses with bad credit or no credit history.
How quickly can a business receive funding through a merchant cash advance?
Many merchant cash advance providers can provide funding to businesses within 24 hours of approval.
What is the best merchant cash advance provider for e-commerce businesses?
PayPal Business is considered one of the best merchant cash advance providers for ecommerce businesses due to its focus on online sales and user-friendly platform.
