Merchant Cash Advance is an approach through which a business owner pays a lump sum amount in advance to suppliers through daily or future credit or debit card transactions.
Small and medium-sized business owners sometimes face a liquidity shortage. As a result, merchants use MCA in the United States of America. Also known as MCA or Point of Sale (POS) Loans, to alleviate liquidity constraints in their businesses.
What is Merchant Cash Advance?
A merchant cash advance (also known as an MCA) is a type of funding that provides your company with immediate access to funds based on credit card transactions. Moreover, you may spend the dollars on whatever things or services you think are essential. This funding option is great for organizations that require assets but do not have access to traditional sources of finance.
Eligibility Criteria for Merchant Cash Advance
The requirements for MCA eligibility are straightforward. The following is a list of MCA requirements:
- Applicants should have a successful business.
- The business’s minimal annual turnover should match the lender’s requirements.
- The company should have been accepting card payments for a long time.
- At last, the candidate should have a good CIBIL score that meets the needs of the financial services industry.
Here is the list of documents you require to apply:
- PAN Card
- Evidence of citizenship
- Proof of business address
- Statutory documents of the business
- Statements of an operative current account for the last one year
- Documents with details of all existing loans
- VAT returns of 6 months prior to the loan application
- Business financial documents for the last 2 years such as IT Returns, Balance Sheet, and Computation Sheet
- Evidence of turnover citing the latest sales or service tax returns
- Know Your Customer (KYC) documents of the promoter and firm
- Bank transaction statements of the POS machine for the previous 1 year
How to Apply for Merchant Cash Advance Online?
At Blursoft, it is easy to apply for the MCA, which we will explain below:
Step 1: Go to Blursoft’s official website and fill out the online form with your basic details. Such as your name, contact number, address, loan amount, e-mail, etc.
Step 2: Once you are done with the basic details, Blursoft’s customer service professional will contact you to verify the provided information and to continue the discussion on the selected loan arrangement.
Step 3: Your business loan application will be sent to the respective bank for further validation and then the bank’s representative will contact you to proceed with loan formalities.
Step 5: After your loan application is approved, within defined working days the approved loan amount will be sent to your mentioned bank account.
Pros of MCA
- Financial assistance for short-term credit demands: A consumer can take a lump sum amount based on the business’s monthly card receipts in order to meet his or her short-term financial demands.
- Easy application process: In comparison to a regular bank loan, the application process for Merchant Cash Advance is significantly less complicated. As a result, this scheme takes significantly less time for approval.
- No Collateral Required: Because the loan amount is transferred directly to the applicant’s account, the credit lender gets the business owner’s bank account information. As a result, there is no need to offer collateral in order to take advantage of this arrangement. As a result, any business owner can apply for this credit plan even if he or she lacks sufficient assets.
- Repayment based on your Sales: Unlike other kinds of business finance, your repayment schedule is based on a defined proportion of your sales, so payments vary according to how well your business performs.
Cons of MCA
- Expensive: As compared to other types of business loans, such as online term loans, or company lines of credit, with APRs ranging from 9% to 99%. MCAs are one of the most pricey forms of financing.
- No benefit to Repaying early: Unlike traditional amortizing loans, you cannot save on interest by returning early because you must always pay a certain sum of fees.
- No federal regulation: Unlike typical loans, merchant cash advances are designed as commercial transactions and are not governed by federal law. On the other hand, MCAs come under the Uniform Commercial Code in each state. Because of the lack of oversight, businesses are frequently prey to predatory companies that employ deceptive marketing and sales practices to offer rapid approvals and funds.
To sum up, you can use Merchant Cash Advance to meet your immediate financial obligations. It saves your time in order to satisfy a short-term monetary crunch. Furthermore, you can repay when you receive cash flow. There is also no requirement to establish collateral in order to obtain MCA.