Business or Merchant Cash Advance FAQ

Editors Note: This is the third article in a three-part series about merchant cash advances. Our first piece explained the basics of MCAs, and our second piece compared business cash advances to conventional bank loans. In this last article, we answer frequently asked questions about MCAs.

How much can I get from a merchant cash advance?

The amount you get from a merchant cash advance depends on how much in credit or debit card sales you process each month. The bigger you are, the larger the available advance. Some business cash advances reportedly go as high as $1 million, but typical arrangements are for less than $200,000.

How long does it take?

From the time you apply for a merchant cash advance, it takes less than a week, sometimes less then 48 hours, for you to get the cash, assuming youre approved.

What do I have to put up for collateral?

Merchant cash advances arent loans, so you dont have to put up any collateral. Instead you agree to sell a portion of your future receivables in exchange for the cash advance.

How long must I be in business to get a merchant cash advance?

Requirements vary among business cash advance providers, but you must show a healthy track record of debit and credit card transactions for at least a few months.

What are the downsides?

Merchant cash advances tend to be more expensive than bank loans and traditional credit lines.

What if my business fails and I havent paid back the merchant cash advance?

You have no obligation to repay the cash advance if your business fails. When purchasing your future receivables, the provider assumes the risk that you could go out of business. But you must follow the terms of the contract. For instance, you cant encourage customers to pay with cash instead of credit.