The lack of available funding for small businesses has created a multi-billion dollar market for merchant cash advance companies, which advance funds to businesses in exchange for a percentage of the businesses' daily income. A business’ remittances are drawn from customers' purchases, typically on a daily or weekly basis, until the obligation has been met. These merchant cash advances are not loans—rather, they are a sale of a portion of future sales.
Benefits of Merchant Cash Advances
•Less paperwork required than a bank commercial loan
•Shorter approval and funding timeframe than a bank commercial loan
•More likely to be approved than via a bank commercial loan
•Collection requires minimal effort from merchant and occurs daily via processor split- funding, ACH debit, or lockbox
•No late fees if business sales slow
•No obligation to repay if business failure occurs