Merchant Cash Advances
Before you contact us, let me define for you what a merchant cash advance is. These forms of capital injections provide funds to businesses from incoming revenue to mitigate operational costs, take advantage of leveraged deals, or both. You receive a lump sum of money today deducted over a set period from your future revenue.
1. Can You Pay a Cash Advance Immediately?
Payment deducts from your account as soon as you receive the Working Capital. So, technically you do start repaying immediately. Two repayment alternatives exist for merchant cash advances. These are:
- A piece of sales.
- Timed withdrawals from your bank account.
- The percentage of your sales. A weekly/daily part of your credit card revenue is paid back to the credit company. Notice that the figure is volatile as it is subject to your sales. As an option, this is more adaptive as it adjusts to falls in cash flow as they occur.
When your sales increase, you refund your Capital faster, but the inverse is also true. Slower sales mean longer payment periods, though.
- Weekly or monthly withdrawals from your bank account. This option is more inflexible and suitable for liquid businesses. Daily payments are charged from your entity’s bank account to the funding vendor. Those payments are a product of an estimate of your monthly earnings and do not change with any lows or increases in sales. Knowing how much you are obligated to refund in advance allows for optimal preparation.
2. How Much Can You Get from a Merchant Cash Advance?
A wide array of vendors exists, and each has its variations in capital ranges and requirements to gain access to cash advances. You will find a sampling of a few MCA providers with their respective offers and terms for qualification.
- Lendio indicates on their website that you can get funding in the range of $5,000 to $200,000, all this hinges on the size and nature of your business entity. They further elaborate on their blog that to gain access to the funding, you need to present various business documents such as:
- Evidence of business operation period
- Banking transaction specifics for your business
- Credit rating for your enterprise
- Your enterprises business plan
- Statements from your bank
- Your balance sheet
- CAN Capital gives you access to $2,500-$250,000 of your future sales, provided you have a minimum of half a year of operation time and $150,000 in yearly business turnover.
- Thor Capital Group indicates that they can provide anywhere from $10,000 to $ million in under 48 hours. However, to qualify for that, you must have an average of at least $10,000 in monthly sales over the past three months. Other determining factors include vendor payment history and assorted public records.
- Avanza Capital will grant you $10,000 to $50,000, having provided them with at least four statements from your bank, usually recent ones, and proof of more than six months of operation. One con of Avanza is that your credit score is considered, so if you have a very low score, this might not be the best option for you.
- Libertas Funding, a large-scale vendor, offers $7,500 to one million dollars. Requirements are half a year in operation, a yearly income of $150,000, and a credit score of 550 upwards. Other documents required are your business certificate, license, and bank account.
3. Can You Have Two Merchant Cash Advances?
Yes, this is what is known as the stacking of loans. In the MCA realm, when an entity has had multiple funding rounds, each is called a position and is referred to numerically in ascending order.
Opportunities or setbacks can sometimes cost more than you expected in the first instance. This is where you may need to get additional funding even if you have outstanding fees from earlier cash advances. You have to be very careful, though; this has resulted in many businesses going under.
Stacking is especially useful when you need future Capital to create competitive advantages; not many specialists recommend it for damage control. Having multiple payments deducted from your account daily, weekly, or monthly can quickly bleed your business of operating Capital that it needs to survive, forcing you into a death spiral of high-interest repayments.
This phenomenon begs the question, “How many loans can you stack up simultaneously?” It is not unheard of to hear companies with up to five merchant cash advances. Some financial experts only recommend that 20% of your sales be tied up in MCAs. If we were to go by this logic, you would have to pull very large amounts of turnover to afford five MCAs simultaneously.
How Do You Get Same Day Funding at iKahn Capital?
The process for attaining working capital solutions is generally the same across the board with different vendors. However, some companies tend to be beginner-friendly in terms of application process and fulfillment. A good example would be iKahn Capital. Their website has a minimalist user interface, making navigation seamless.
What’s more, they have robust encryption on their site, letting you rest easy knowing that your data is safe and very private.
At iKahn Capital, you have two options as far as the first step of the application goes. The first option is to fill out an easy-to-comprehend online application form and submit it in real-time.
The alternative is to download the form, fill it out offline, and fax it to their number along with three recent bank statements.
Fields in the application form fall under six main segments:
- Business Information
- Merchant/Owner information
- Partner information
- Business property information
- Business trade references
- Other pertinent information
All this information helps determine how much funding you are eligible for and your payment factor.
Next, their team will go over your application and business details. They will reach out to have a more in-depth conversation about your needs and available solutions. The time between evaluation and them reaching out is usually under six hours, making it quite fast.
Once all the terms are agreed on, and you are comfortable with the details, funding will be deposited in your business account within 24 hours. Always remember that repayment for the funding starts as soon as your business receives the funds. Merchant cash advances have no grace period.
For even more funding options and products from iKahn Capital, you can learn more by navigating through the website or by applying here.