A merchant cash advance (MCA) provides capital based on a business's future sales, offering quicker approval than bank loans with less stringent credit requirements. However, MCAs are typically more expensive and can come with high daily retrieval rates and short payback periods. Businesses should carefully evaluate their needs and seek reputable providers to avoid pitfalls associated with MCAs.

1. Merchant Cash Advance
Is it right for your business?

2. What is a Merchant Cash Advance?

3. A merchant cash advance is working capital
given by a private provider to a business
based upon its future sales.
What is a Merchant Cash Advance?

4. MCA VS Bank Loan

5. MCA VS. Bank Loan
Advance on Future Sales Money lent based on cashflow and/or collateral
Factor Rate Funds lent at a fixed rate of interest
Loan Amount may be much greater than an
Amount of Advance Limited by future sales
Advance
Unregulated Industry Highly Regulated
Application and approval processing is Application process is usually lengthy and high
quick and easy. decline rates
Much lower approval rates. 60% of bank loans
High approval rates
declined
Bad Credit = Approvals Bad credit = Decline
No personal Gurantee May require personal guarantee
No fixed repayment amount Fixed repayment amount
No fixed repayment terms Fixed Repayment Term
Will not show on credit report Will show on your credit report
Fees are tax deductible Fees are deductible
MCA VS Bank Loan

6. The Top Funded Industries

7. Top 10 Most Funded Industries 2nd Qt 2011
The Top Funded Industries

8.  Application Process
 Funding—72 Hours or less
 Factor Rate 1.25–1.35
 Payback 6–9 months
 Daily Retrieval Rate 5%–20% +
 Credit Card Processing—split funding
 ACH withdrawals
 Lockbox—Split funding
How does Merchant Cash Advance Work?

9. Strategic Uses of Merchant Cash Advance

10.  Defined use of the funds
 Growth or expansion are the best
uses of the funds
 Compare the Internal Rate of
Return
 Negotiate for the lowest possible
daily retrieval rate
 Negotiate for the longest possible
payback period
Strategic Uses of Merchant Cash Advance

11. Merchant cash advances are expensive, but large credit card
purchases will cost you more
Credit Card
CREDIT CARD
Interest Rate Cost to Company
15% $ 8,861.66
16% $ 9,537.42
17% $ 10,222.15
18% $ 10,915.53
19% $ 11,617.30
20% $ 12,327.15
Top 10 Most Funded Industries
2nd Qt 2011
FACTORING
Factor Rate Cost to Company
1.20 $ 2,000
1.25 $ 2,500
1.30 $ 3,000
1.35 $ 3,500
1.40 $ 4,000
1.45 $ 4,500
Don’t Put It On The Credit Card

12. What to Avoid
 High Daily Retrieval Rates
 Adjustable daily retrieval rates
 Short Payback Periods
 Dogpiling
 Switching credit card processors
Merchant Cash Advance Pitfalls

13. How to Find a Reputable Merchant Cash Advance Company
 Know your merchant cash advance
company- Honesty Integrity and
Intelligence
 Full Disclosure—No hidden fees or
adjustable rates
 Excellent Customer Service—courteous
 Get Multiple Quotes through Blindbid

14. Merchant Cash Advance
Is it right for your business?