This post was originally published on On Deck
In the world of business financing, securing the right funding can be a significant challenge for small businesses. Traditional small business loans often come with stringent requirements, leaving many entrepreneurs in search of alternative financing options.
One option that has gained popularity in recent years is the merchant cash advance (MCA). Ten percent of small businesses that sought financing in 2022 sought out a merchant cash advance, according to a survey published by the Federal Reserve.
While MCAs offer small business owners quick access to capital, they come with their own set of advantages and drawbacks. Let’s delve into some of the pros and cons of merchant cash advances, how they work, their impact on credit and viable alternatives.
Pros of Merchant Cash Advances
Easy to qualify for. One of the most significant advantages of an MCA is the ease of applying. Traditional lenders often require a lengthy application and approval process, including a thorough review of credit history, financial statements and collateral. In contrast, MCAs offered by merchant cash advance companies are based primarily on the volume of credit card sales. This can make them accessible to businesses with bad credit scores or those without substantial assets to offer
— Read the rest of this post, which was originally published on On Deck.
