How a Merchant Cash Advance Can Help you Scale Faster than a Loan?

March 2019

Running your own small business is complicated, especially when it’s time to grow. You don’t have a board of directors to lean on for guidance on how best to scale up, or an entire department devoted to managing your business finances. You need to figure out a lot of things on your own, even if you do have a team of experts that you can call on for advice when needed. Bottom-line, no matter how good the advice you get, you need to trust your instincts especially when it comes to business growth.

But there are a few simple rules that pretty much everyone agrees on about scaling up, rules that are critical to your business success:

• Businesses have to grow to survive.

• You need working capital to scale up.

• You don’t want to be drowning in debt.

And here’s another one: if you’re the owner of a small business, you are probably not going to get a traditional loan from a bank. The good news is that, increasingly, that’s not a problem. In fact, alternative funding is not only easier (and faster) to access, it may be the best choice for your company. In particular, if your business centers on daily sales – you have a store, an art gallery, a restaurant – a merchant cash advance is an option worth considering when you’re looking to scale up and expand your business.

What is a merchant cash advance?

Merchant cash advances are not loans; they are an actual advance on your business’s future income. Approval for this type of funding is based on your how much money your business is taking in, on average. Since your credit score isn’t at issue here, Merchant cash advances are a way for smaller businesses to access funding quickly, even if the business owner doesn’t have a great credit score.

How do merchant cash advances work?

Soon after you’re approved and accept an offer, a funding company deposits a lump sum amount in your business account. This sum is an advance on your future revenues. It’s repaid through automatic deductions of a set percentage of your receipts, with are withdrawn from your business account.

For example, if the set percentage is 10%, and the day’s revenues total $500, then the repayment amount for that day is $50. On another day, when revenues are $1,500, the repayment amount would be $150. Funds are automatically withdrawn until the advance and any fees are paid back. You should be aware that merchant cash advances have higher fees than the interest you’d pay on a typical bank loan.

How can a merchant cash advance help me scale up quickly?

The primary reason is that merchant cash advances give you quick access to funding and are easier to access for the typical small business. According to the 2017 Small Business Credit Survey (SBCS) by Federal Reserve Banks, 79% of those who applied for a merchant cash advance were approved, as opposed to 62% of the applicants for a business loan.

And while money from a bank loan may not be available for a month or more, according to a study by Harvard Business School, MCA funds are typically deposited into the business owners account within 72 hours. Significantly faster access to funds means you can scale up more quickly, and you don’t risk losing out on opportunities that suddenly present themselves.

Another reason is that MCAs are flexible. You’re repaying it by a set percentage of the day’s actual receipts, not your projected revenue. Payment amounts will always align with your business cash flow. You’ll pay less during slow periods, and you’ll catch up by paying more during high-volume times. Traditional loans with fixed payment rates may be difficult to pay during slower business cycles.

Still unsure? For help in understanding your funding options when you want to scale up your business (or meet existing obligations you can turn to One Park Financial. The company’s small business experts will explain your options and guide you through the funding process. Visit or call 855.218.8819 for more information.