Merchant Cash Advances help inject cash into businesses faced with a negative working capital situation or are on the brink of going out of business. Although it is one of the many different working capital funding options available in the market, yet it remains the frontrunner in providing business owners with some much-needed breathing space when it comes to immediate liquidity.
Merchant cash advance lenders give small business owners the advance in exchange for a daily percentage of their debit or credit card sales. While the percentage to be deducted is fixed, the amount is not. This reduces the pressure on business owners to meet a daily sales target for repayment requirements. In a separate scenario, the borrower repays equal withdrawals daily or weekly based on estimated revenue. This scenario is easier to implement in a merchant cash advance software since charging a fixed amount based on estimated revenue does not have to monitor transactions.
Although merchant cash advance is not a new concept when it comes to working capital cash injections, the way these advances are currently processed and handled has changed significantly. This has been possible thanks to merchant cash advance software and merchant cash advance lending platforms that have made it easier for advance providers to churn and approve applications more quickly and decide on the percentage fee more accurately, thereby reducing risk for both the merchant cash advance companies and the borrowers.