Merchant Cash Advance or sometimes called Credit Card Receivables financing is a unique way to make working capital available to small businesses.   Many businesses that accept credit cards have an asset that most traditional funding sources don’t even consider – their future credit card sales. The future card sales, or a portion of the sales, can be sold at a discount to provide the working capital to meet a small company’s immediate needs.

This is a purchase of a small portion of their sales, not a loan.  The business normally delivers the purchased sales to the funder as a fixed percentage of the future sales as they occur. This means the amount paid back will fluctuate on a daily basis with the businesses overall business and credit card sales.This is unique because there is no fixed payment amount, no fixed term and no interest rate.  

This is a benefit to the business as they will not be facing a fixed payment if their business slows for various reasons like seasonal or temporary business reductions. The retrieval of the future sales automatically adjusts to the merchant’s business cycles and trends.

The approval process is relatively simple as it relies heavily on the past credit card history of the business along with other business and owner history. Important considerations are how long the business has been in operation, past sales, and the ability to sustain or increase business in the near future. 

Unlike a bank that favors large loans, outside collateral and a long-term loan period, the purchase agreement is much shorter in length and will normally be completed in well under one year.