Cash flow issues can kill a business in the blink of an eye. What if you’re hit with a huge order but your stock is dry and you don’t have the cash to ring up your supplier?
A small business bank loan would take ages to process and you probably wouldn’t qualify anyway because of your questionable credit score.
Merchant cash advance companies will fulfill that funding gap, and they do it fast.
Here’s 7 of the best business cash advance services so you can secure that much needed cash flow.
7 Best Merchant Cash Advance Companies Overview:
Forward Financing – Low Requirements, Higher Costs
- Offers advances from $5,000 to $300,000
- Minimum annual revenue to qualify: $120,000
- 500 minimum personal credit score
Forward Financing is a Boston-based merchant cash advance company that specializes in providing financing to small businesses across the nation.
Forward Financing bases their approval on a company’s revenue and cash flow, making it easier for businesses that might not qualify for traditional loans.
The application process is quick, taking about ten minutes, and business owners typically receive a response within a few hours, sometimes even receiving funding on the same day.
The company has garnered positive feedback for its quick and easy application process, fast funding, and excellent customer service.
Low Approval Requirements
Forward Financing is known for its low approval requirements. For instance, borrowers only need a minimum credit score of 500 for approval. They also cater to younger businesses, requiring only one year of business history.
Higher Fees Than Industry Standards
While they offer low approval requirements and fast funding, Forward Financing’s fees tend to be higher than industry standards.
They use a factor rate system, which can sometimes translate to higher effective interest rates. For example, borrowing $50,000 with a factor rate of 1.3 would mean you’d pay $15,000 to borrow that amount, equivalent to a 51.45% APR on a 12-month term.
They also charge origination fees based on the financing amount. For instance, there’s a $300 fee for financing up to $10,000 and a $995 fee for financing up to $100,000.
Why Choose Forward Financing
If your business struggles to secure traditional business financing due to age or a poor credit score, Forward Financing can be an alternative.
They offer flexibility in repayment. Since merchant cash advance payments depend on daily cash flow, the repayment terms adjust based on your revenue. This means on low revenue days, you pay less, and on high revenue days, you pay more.
They have a transparent approach, being upfront about their fees once the application process starts.
Lendr – Best Eligibility Criteria For Large Advances
- Offers advances from $5,000 to $500,000
- Minimum annual revenue: $120,000
- Minimum time in business: 1 year
Lendr is a fintech company launched in 2011 as Viking Funding Group and rebranded to Lendr in 2016, founded Tim Roach, a serial entrepreneur and former Navy seal. They’re one of the many merchant cash advance providers located in the U.S.
The application is fast, often approved within hours. In addition, they provide dedicated customer support to guide businesses through the lending process.
Repayment terms are flexible. They adjust the repayment based on the business’s daily sales, making it easier for businesses with fluctuating revenues. As for credit score, even businesses with poor credit can get approved, making it accessible for a wider range of businesses.
There’s no hidden fees. Lendr is intentionally transparent, ensuring businesses are not caught off guard with unexpected costs.
Downsides of Using Lendr
- The minimum time in business required by Lendr, which is one year, may be an obstacle for some businesses.
- While Lendr is flexible with terms, the repayments are based on daily sales. Businesses need to be prepared for daily deductions from their bank accounts.
Why Choose Lendr For Your Merchant Cash Advance Loan
Lendr might be an excellent choice for businesses that need quick access to capital without the lengthy approval process of traditional banks.
Their flexible repayment terms based on daily sales can be beneficial for businesses with variable revenues. Additionally, their transparency and dedicated support ensure that businesses have a clear understanding of the process and any associated costs.
Payability – Best Merchant Cash Advances For Ecommerce
- Offers up to $250,000
- Minimum monthly revenue: $50,000
- No minimum credit score requirements
Payability is an eCommerce-focused financial services company headquartered in New York City.
The company was founded in 2015 and has since provided eCommerce sellers with merchant cash advances and other tailored bankroll solutions.
Payability’s Instant Access product allows sellers to receive up to 80% of the previous day’s revenue daily, even on weekends. This helps in improving cash flow, especially for businesses that would otherwise have to wait for weeks to get their payouts from platforms like Amazon.
Payability stands out from merchant cash advance providers because they don’t consider your credit score or run a credit check when approving applications. This can be a massive benefit for ecommerce businesses.
In addition to Instant Access, Payability also offers Instant Advance, which allows sellers to receive immediate funding based on estimated future sales. This rapid finance can be used for inventory or other business-related expenses.
As with many modern merchant cash advance companies, the qualification process is straightforward, focusing mainly on sales numbers and a standard background check.
The Payability Seller Card allows users to access their funds immediately, acting like a debit card for Payability funds. It also offers 2% cashback on all purchases.
Surprise Fees and Opaque Contracts
One of the major points to note is that the fees are removed from your gross sales before any deductions like Amazon fees, refunds, or chargebacks. This means the actual fee could be higher than expected.
Even after canceling their Instant Access account during the trial period, some customers report being charged anyway. This may be a simple error in accounting, but do pay attention to the T&C when signing up.
If a seller gets suspended on a platform like Amazon, they might still incur fees from Payability without having access to their payouts.
Some users found the reports and contracts provided by Payability to be confusing and not user-friendly.
Why Choose Payability For Your Merchant Cash Advance Company
Payability can be a valuable choice for eCommerce businesses, especially those selling on platforms like Amazon, Shopify, Walmart, and NewEgg, who face cash flow challenges due to delayed payouts.
By providing instant access to funds, Payability enables businesses to reinvest in inventory, manage operational costs, and grow faster.
The absence of credit checks and the ease of the application process make it accessible to a wide range of sellers. However, it’s essential to be aware of the fee structure and ensure that the benefits outweigh the costs.
Fundbox – Best Merchant Cash Advances For New Businesses
- Minimum time in business: 3 months
- Offers from $1,000 to $150,000.
- Minimum credit score requirement: 500
Fundbox is a working capital platform headquartered in San Francisco, California. It was founded by Eyal Shinar, Tomer Michaeli, and Yuval Ariav in August 2013 in Israel.
Fundbox offers a simple and direct online application procedure for fast funding. Upon approval, companies can access the funds by the subsequent working day.
If your money software shows you’ve been doing business for 2 to 3 months and you have a business bank account, you have a good shot at getting approved.
You can also connect your regular bank account, but you need to show you’ve used a business credit card for at least 6 months. If your business has considerable monthly revenue, Fundbox might be more flexible with you.
Fundbox prides itself on offering clear terms and transparent pricing with no hidden fees. Businesses know exactly what they’re paying for with their merchant cash advance financing.
Fundbox offers flexible repayment terms, allowing businesses to choose a repayment schedule that fits their needs.
As a downside, the maximum amount a business can borrow from Fundbox might be lower than other financing options.
Why Fundbox might be a good choice
Fundbox is designed for small to medium-sized businesses that need quick access to capital. Their transparent pricing, fast and simple process, and quick funding make them a popular choice for businesses that need funds in a short amount of time.
Additionally, their flexible repayment options can be beneficial for businesses with varying cash flows. If you’re looking for a hassle-free financing solution without the lengthy approval processes of traditional banks, Fundbox might be a good fit for your needs.
National Business Capital – Best For Large Merchant Cash Advance
- Offers from $10,000 to $10 million, depending on qualification
- Minimum time in business: 1 year
- Your credit score won’t matter if other requirements are met
National Business Capital (NBC) was founded in 2007 and is headquartered in Bohemia, New York.
It’s not a direct lender, but connects connects applicants with over 75 lender partners.
The company specializes in providing a full range of financial services such as bookkeeping and marketing. They also offer a host of loan products, like business lines of credit and of course merchant cash advances.
Their MCA application is streamlined, allowing for quick approvals and funding, often within 24 hours. They have a high approval rate and work with businesses whose credit score might not qualify them for traditional bank loans.
The NBC merchant cash advance doesn’t require collateral, which can be beneficial for newer businesses or those without significant assets.
Customer feedback is largely positive, which is huge praise for a platform of this size.
Downsides of National Business Capital MCA
- While flexible and offering abundant resources, the NBC MCA contracts can be layered with additional fees and different payment terms depending on the online lender partner in question.
Why Choose National Business Capital For Merchant Cash Advance
If you’re looking for a flexible and fast merchant cash advance solution, National Business Capital could be a good fit. Their diverse loan options cater to various business needs, and their high approval rate means they can work with a wide range of businesses, including those that might not qualify elsewhere.
National Funding – Long Term Merchant Cash Advance With Flexibility
- Offers long-term financing.
- Offers from $5,000 to $400,000.
- Loan terms 4-24 months.
National Funding is a small business funding and equipment leasing company headquartered in San Diego, California. Founded in 1999 by David Gilbert, the company has been committed to serving the small business community nationwide for over two decades.
As most modern merchant cash advance companies, they provide quick access to funding, often within 24 hours, which is beneficial for businesses with immediate financial needs.
They offer flexible eligibility requirements, primarily focusing on credit card sales. The repayment schedules are also adaptable, allowing adjustments during slow sales periods. In addition, they have a low minimum credit score requirement for business owners and no collateral requirements.
This makes it easier for new businesses to secure funding. Rather they base their rates and loan terms on how well you maintain your merchant cash advance account.
National Funding is one of the only merchant cash advance companies offering loan terms ranging up to 24 months at a time, which you can apply to extend depending on your acount standing.
In addition to merchant cash advance, National Funding provides traditional business loans, equipment financing, and leasing.
Downsides to National Funding Merchant Cash Advance
- Merchant cash advances from National Funding can be more expensive compared to other business loans, with APRs potentially reaching up to 200%.
- Unlike the transparent merchant cash advance companies on this list, National Funding’s contracts can be intricate, especially regarding payments, factor rates, and repayment schedules.
- This shouldn’t be an issue though, because they also provide a personalized loan specialist to assist businesses throughout the process, ensuring that the financing option aligns with the business’s needs.
Why Choose National Funding As Your Merchant Cash Advance company
National Funding has been in the industry since 1999, providing capital to businesses across various sectors. Their experience and the volume of businesses they’ve assisted can instill confidence in potential borrowers.
Can Capital – Best Merchant Cash Advance For Businesses With Bad Credit
- Best for bad credit.
- Offers from $2,500 to $250,000.
- Payment schedule based on credit and debit card sales
CAN Capital is a pioneering company in the merchant cash advance industry, founded as Advanceme Inc in 1998 and located in the U.S. It’s been in the industry for over 20 years, making it one of the pioneers in the merchant cash advance space.
Can Capital boasts a fast application and approval process, allowing businesses to access funds swiftly.
They offer a variety of loan amounts and repayment terms, catering to the diverse needs of businesses. Payment schedule and amounts are usually based on credit and debit card sales from the past.
Unlike traditional loans, Can Capital doesn’t require any collateral, making it easier for businesses to apply. They can also work with business owners who have gone through personal or company, as long as it was at least two years ago.
Cons of Can Capital:
- Merchant cash advances can be more expensive than traditional loans, and Can Capital is no exception.
- The repayment structure often involves daily deductions from the business’s bank account, which might not be suitable for all businesses.
- Merchant cash advances are typically designed for short-term financial needs. If a business is looking for long-term financing, this might not be the best option.
Why Choose Can Capital For Your Merchant Cash Advance
Can Capital offers tailored solutions based on the specific needs and financial health of a business. This means they can provide a financing solution that aligns with your business’s requirements.
With over two decades in the industry, Can Capital has a wealth of experience and has processed billions in business loans. Their longstanding presence indicates reliability and trustworthiness.
The process is straightforward and doesn’t involve extensive paperwork. This can be beneficial for businesses looking for quick and hassle-free financing.
What Is a Merchant or Business Cash Advance (MCA)?
A business cash advance, or merchant cash advance (MCA), is a type of financing option that provides small business owners with fast funding through a simple process. Business owners receive funds as a lump sum from a merchant cash advance provider and repay the advance from upcoming sales, often on a daily basis.
Unlike the conventional approach of borrowing a predetermined amount and repaying it with interest, businesses utilizing a cash advance essentially “sell” a fraction of their impending sales to merchant cash advance companies in return for immediate funds.
When Should a Business Apply For Merchant Cash Advances?
MCAs are best suited for businesses that have high credit card sales volume, need funding quickly, and may not qualify for other short term loans. You know what I mean if you’re in ecommerce or retail. The approval process is fast, and business owners can usually get approved in a day or two, with very little paperwork.
However, MCAs are often expensive and have high effective rates ranging from 30% to 350%+. The repayment terms are usually short, ranging from 3 to 36 months.
It’s important to note that MCAs are not technically business loans but instead offer an advance against future sales, based on past debit and credit card sales. They don’t help build business credit either.
Benefits of Merchant Cash Advances
There’s plenty of reasons a business, especially a small business looking for financing, would want to work with merchant cash advance companies.
1. Speedy Access to Funds
MCAs typically boast a quick approval process, often providing businesses with needed funds within 24-48 hours.
2. High Approval Rate
With emphasis on sales volume over credit score, businesses that might not qualify for traditional loans could still be eligible for a cash advance.
3. Flexible Repayment Structure
Repayments adjust with your sales volume. During high sales periods, you pay more, and during slower periods, you pay less, easing the burden on businesses with seasonal revenues.
4. No Collaterals
Unlike some traditional loans, MCAs are unsecured, meaning businesses don’t need to pledge assets as collateral.
5. Simple Application Process
The paperwork and documentation required are usually less cumbersome than traditional loans, making the application process straightforward.
Drawbacks of Using Merchant Cash Advances
Despite the obvious benefits, we shouldn’t undermine the cons of merchant cash advance companies.
1. High Costs
The convenience and accessibility of merchant advance companies often come at a higher cost. Factor rates can translate into high effective annual percentage rates (APR), making them more expensive than other financing options.
2. Daily Withdrawals Can Be Brutal
With frequent (often daily) repayments, businesses need to ensure they maintain adequate daily cash funds, which can be challenging, especially during slow sales periods.
3. Potential for Debt Cycle
Due to the ease of obtaining merchant cash advance loans, businesses might find themselves taking out another cash advance to pay off a previous one, leading to a potential cycle of debt.
4. Less Protection for Borrowers
Since MCAs are structured as sales of future revenue and not as loans, they aren’t subject to the same regulations and borrower protections that traditional loans might offer.
5. Impact on Future Financing
Regularly relying on MCAs might signal cash flow problems to future lenders or investors, potentially affecting a business’s ability to secure other types of financing.
Your Turn
Business cash advances are a niche funding instrument, only really useful for a unique business situation. But if you find yourself in that very situation, an MCA can be the difference between massive growth and bankruptcy.
Take a good look at the merchant cash advance lenders listed here to find one that offers the best terms for you.
Keep in mind though, that there are alternatives to merchant cash advance companies available. If MCA terms don’t seem like a good match, there’s nothing wrong with applying for a traditional small business loan or other type of investment instead.
