A Merchant Cash Advance (MCA) provides upfront capital in exchange for a percentage of daily credit and debit card sales. This percentage is paid through daily automated withdrawals from the business bank account. It has no fixed monthly payments and repayment depends on daily card receipts. MCAs offer higher borrowing limits, flexible repayment terms, quicker approval, and no collateral requirements compared to business loans, but have higher interest rates and do not impact credit scores. MCAs can be a good option for businesses that need fast funding and do not have collateral beyond their cash flow.

1. A Business Owner's Guide To Merchant Cash
Advance

2. A Merchant Cash Advance (MCA) Is Not Exactly A Loan. It Is
Upfront Capital Given In Return For A Percentage Of The
Business's Daily Credit And Debit Card Sales Volume.

3. Terms In MCA

4. • ACH:
This Percentage Is Paid From The Owners’ Business Bank Account
Through ACH (Automated Clearing House) Withdrawals.

5. • Factor Rate:
An Mca Does Not Have A Fixed Monthly Payment As It Is Based
On A Factor Rate And Not Interest Rate.

6. • Retrieval Rate:
It Is The Percentage Of Daily Receipts That Is Used To Repay The
Advance.

7. Difference between MCA and Business Loan

9. Features of Merchant Cash Advance

10. Pros
• High-borrowing Limits: A Advance Can Range From 50% To
250% Of Your Business’s Credit Card Transactions.
• Flexible Repayment: Repayments Depend On Your Business’s
Daily Credit/Debit Card Receipts.
• Lesser Weightage Of Credit History: Lenders Are Only
Concerned About Operational History, Minimum Monthly
Transactions, Positive Cash Flow, And Business Owners’
Experience.

11. • Quick Application Process: MCA Requires Less Paperwork And
Has Easier Eligibility Criteria. The Funds Are Disbursed Sooner,
Sometimes Within A Day.
• Negotiable Terms: Businesses Can Take A Top-up In The Midst
Of The Repayment Process If More Capital Funding Is Required.
• Collateral-free: You Don’t Have To Propose Any Collateral To
Receive MCA.
• No Charges For Pre-closure: There Are No Penalties For Early
Closure Of The Loan.

12. Cons
• No Impact On Credit Score: Merchant Cash Advance Providers
Do Not Report To Credit Bureaus.
• High Interest Rate: The Interest Charged For An MCA Is Much
Higher Than Other Traditional Loans.

13. 3. Facility For Line Of Credit:
This Benefit Enables The Owner To Withdraw The Amount
According To Their Needs And Pay The Interest On The Amount
Withdrawn.

14. 4. Ownership Is Preserved:
Working Capital Loans Don’t Require You To Part With Any
Ownership Rights.

15. How To Qualify For A Working Capital Loan?
• The Applicant Should Be Running The Business For At Least 3
Years.
• The Business Must Prove Its Profitability As Per Industry Norms.
• The Applicant Needs To Submit Audited Financial Statements Of
The Last Three Years, Necessary Licenses, And The Profiles And
Kyc Of Directors And Partners In The Company.

16. If Your Financial Need Is Quite Pressing And You Don’t Have Any
Collateral Other Than The Cash Flow Of Your Business, Opting For
An MCA Is Wise.

17. Thank You !
Would Love to Hear From You
Hero FinCorp Limited
09, Basant Lok, Vasant Vihar, New Delhi - 110057
Tel. 18001024145
Email Id: corporate.care@herofincorp.com
Website: https://www.herofincorp.com/
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