An MCA is not a loan but an advance of a business’ future receivables. Lenders gauge how much to advance a small business owner in several ways, including previous credit card sales and revenue going into their business bank account. Variables such as industry, number of deposits, daily balances among others are used by the lender to hedge risk. Regardless, MCA lenders offer to advance a portion of a small business’ future sales as well as an agreement with the business owner on the percentage of future sales which are being sold to the lender. A Merchant Cash Advance (MCA) is one of the easiest funding options for small business owners because MCAs are unsecured, do not require strong credit, usually do not require collateral, and require little documentation (if any). The average MCA file can be funded within a day and usually requires several months of business bank statements.

MCAs do not carry interest. Advances carry factor rates, which are also called buy rates that are simply an agreement of how much of a small business’ future sales will be paid to the lender. Some advances may also collect repayment terms by taking a portion of business’ credit card receipts each day as well until their agreed sale of future receivables is completed. MCA payback frequency varies depending on the risk and bank account statistics. For instance, if a borrower wants to have a monthly or weekly payment the lender gauges that opportunity off the average daily balance of the business in the business bank account. When daily balances are variable or lower MCA lenders may require a daily payment. Probably the most negative part of an MCA is cost of money. MCAs can be expensive. That is, MCAs can be as high as +50% in payback. Also, most advances carry origination fees for the work by the lender, which can be as high as 10% of the loan. MCA cost of money is like how credit card cash advances operate and, in some cases, better.

Merchant cash advances have several advantages for small business owners, and some can include: Fast funding – Some MCA companies can fund small businesses in 90 minutes. Most MCAs do not have UCC liens. MCAs are not usually reported on personal credit. Funds are unsecured. Payment frequency can be flexible at times. Most MCAs do not carry a personal guarantee. Easily refinance options which can cut costs. No early payback penalties. Small business owners can build a relationship with the lender ultimately securing better programing. Few required documents (including taxes) for funding.

An MCA broker is a predator. Defined: A predator is a person who ruthlessly exploits others. Answer = Yes.

What is stacking? Stacking is when a client, usually coordinated by a Merchant Cash Advance broker (predator) takes more than one cash advance at the same time. However, it is arguable whether or not stacking occurs at the same time, or within a specific time frame. For instance, whether the MCA company does not know about the other advance what exactly is stacking? If the MCA company does not know if the client takes a MCA a month after theirs, then what is the difference?