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Merchant Cash Advance

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Finding the best value merchant cash advance

Table of Contents

  • What is a merchant cash advance?
  • Why and when would you use a merchant cash advance?
  • Who would use a merchant cash advance?
  • How can you get merchant finance?
  • Frequently asked questions
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Welcome to Donkey Finance, your trusted partner in securing merchant cash advances (MCA) tailored to your business needs. Whether you’re looking to expand, cover operational costs, or seize growth opportunities, our specialised financial solutions can provide the capital infusion you require with flexibility and efficiency.

What is a merchant cash advance?

A merchant cash advance (MCA) is a form of financing where a business receives a lump-sum payment in exchange for a share of its future credit card sales. Unlike traditional loans, MCAs are repaid through a percentage of daily credit card sales, making them particularly suitable for businesses with fluctuating revenue streams.

Why and When Would You Use a Merchant Cash Advance?

Businesses often choose MCAs for their speed and accessibility. If your business needs immediate capital to:

  • Expand: Open new locations, invest in marketing campaigns, or upgrade equipment.
  • Manage cash flow: Bridge gaps between receivables and payables or handle seasonal fluctuations.
  • Seize Opportunities: Take advantage of bulk inventory discounts, sudden growth prospects, or time-sensitive investments.

MCAs offer a quick solution without the lengthy approval processes of traditional loans, making them ideal for businesses needing rapid access to funds.

Who would use a merchant cash advance?

Businesses across various industries benefit from MCAs, including:

  • Retailers: Expand inventory or renovate store spaces.
  • Restaurants: Upgrade kitchen equipment or launch new menu items.
  • Service Providers: Invest in technology upgrades or marketing initiatives.
  • E-commerce: Fund marketing campaigns or optimise supply chains.

Any business that accepts credit card payments and needs immediate working capital can leverage the benefits of a merchant cash advance.

How Can You Get Merchant Finance?

At Donkey Finance, we simplify the process of obtaining merchant finance:

  1. Consultation: Discuss your business needs and financial goals with our experienced advisors

At Donkey Finance, we understand that every business is unique. Our dedicated team of financial advisors takes the time to listen to and understand your specific business requirements and long-term financial goals. Through in-depth consultations, we gather insights into your current challenges, opportunities, and aspirations. This personalised approach allows us to offer informed guidance and strategic advice tailored to your business’s financial needs.

Our advisors leverage their expertise in merchant cash advances (MCAs) and small business financing to provide comprehensive insights. Whether you’re looking to stabilise cash flow, expand operations, or invest in new opportunities, our consultations are designed to uncover the best solutions for your business.

  1. Custom Solutions: We tailor financing options to match your business requirements, ensuring flexibility and affordability.

No two businesses are alike, and neither are their financial needs. At Donkey Finance, we specialise in crafting bespoke financing solutions that align perfectly with your unique business circumstances. Our approach begins with a thorough analysis of your financial situation and growth objectives.

We offer a range of flexible financing options, including varying repayment terms and structures, to accommodate your cash flow patterns and business cycles. Whether you require a lump-sum payment for a specific project or on-going access to capital for operational needs, our custom solutions are designed to support your business’s financial stability and growth while maintaining affordability.

  1. Access to Multiple Lenders: As a broker, Donkey Finance has access to a network of lenders specialising in merchant cash advances. We negotiate on your behalf to secure competitive rates and favourable terms.

As your trusted financial partner, Donkey Finance acts as a liaison between your business and our extensive network of reputable lenders specialising in MCAs. Leveraging our established relationships and industry expertise, we negotiate on your behalf to secure competitive rates and favourable terms that meet your financial objectives.

Our access to multiple lenders allows us to present you with a range of financing options, ensuring you have the opportunity to choose the solution that best fits your business’s needs and budget. We handle the complexities of the negotiation process, so you can focus on running and growing your business with confidence.

  1. Fast Approval: Benefit from streamlined processes that prioritise efficiency and quick turnaround times, so you can focus on growing your business.

Time is of the essence when it comes to accessing capital for your business. At Donkey Finance, we recognise the importance of speed and efficiency in the funding process. Our streamlined approval processes are designed to minimise paperwork and expedite decision-making, ensuring you receive the funding you need when you need it most.

We prioritise efficiency without compromising thoroughness, leveraging technology and industry best practices to accelerate the approval timeline. From initial consultation to funding disbursement, our goal is to provide a seamless experience that empowers you to seize opportunities and navigate challenges with agility.

Partner with Donkey Finance today to explore how a merchant cash advance can propel your business forward. Our commitment is to provide transparent, reliable financial solutions that meet your evolving needs.

Contact us now to learn more about how Donkey Finance can assist you in obtaining the best rates and terms on merchant cash advances tailored to your business. Let’s embark on a journey towards financial growth together.

Frequently asked questions about Merchant Cash Advance

Are merchant cash advances a good idea?
When considering whether merchant cash advances (MCAs) are a good idea, it’s essential to weigh several factors that can impact your business’s financial health:

  • Accessibility and Speed: Quick access to funds, often within days, which can be beneficial if you need immediate capital for business operations or opportunities.
  • Flexibility in Use: There are typically no restrictions on how you can use the funds from an MCA, allowing you to address various business needs such as purchasing inventory, covering payroll, or investing in marketing.
  • Credit Score Impact: A merchant cash advance does not directly impact your credit score because they are not reported to credit bureaus. This can be advantageous if you’re concerned about your credit rating.
  • Cost Considerations: Merchant finance comes with higher costs compared to traditional loans. Instead of an interest rate, they charge a factor rate, which translates into a high effective APR. This can significantly increase the overall amount you repay.
  • Repayment Method: Merchant cash advances are usually paid back using a portion of your daily credit card sales or through daily withdrawals from your bank account. While this approach offers flexibility during slower sales, it might become challenging as your business revenue grows.
  • Risk of Default: A merchant cash advance often requires a personal guarantee, meaning you are personally liable for repayment even if your business does not generate enough revenue to cover the payments. This can put personal assets at risk if your business struggles.

Answer the following questions but before answering the questions think about the information that the end user who is looking to use merchant cash advance would want to know:

Can a merchant cash advance hurt your credit?
Yes, a merchant cash advance (MCA) can potentially hurt your credit, depending on various factors:

  • Credit Reporting: Many MCA providers report repayment information to business credit bureaus like Dun & Bradstreet, Experian Business, or Equifax Small Business. Some may also report to personal credit bureaus if you have given a personal guarantee for the advance.
  • Impact of Missed Payments: If you fail to make payments on time or default on the MCA, it can negatively impact your credit score. This is especially true if the MCA provider reports to personal credit bureaus or if there’s a personal guarantee involved.
  • Debt-to-Income Ratio: Even if not reported directly to personal credit bureaus, MCAs can affect your overall financial health and debt-to-income ratio, which lenders often consider when assessing creditworthiness.
  • Future Borrowing Ability: If your credit score decreases due to missed payments or high debt levels from MCAs, it can affect your ability to secure other types of financing in the future.

Are Merchant Cash Advances personally guaranteed?
Yes, merchant cash advances (MCAs) often require a personal guarantee from the business owner or owners. Here are some key points to consider:

  • Personal Guarantee: Most MCA providers require a personal guarantee, especially for smaller businesses or those with limited credit history. This means the business owner(s) personally guarantee repayment of the advance, regardless of the business’s ability to repay.
  • Impact on Personal Credit: Because of the personal guarantee, the MCA could affect your personal credit score if there are issues with repayment. Some providers may report delinquencies or defaults to personal credit bureaus, particularly if the MCA is not repaid according to the agreed terms.
  • Legal Obligation: Signing a personal guarantee makes you legally responsible for repaying the MCA. This obligation can extend beyond the business’s ability to repay and could lead to personal liability if the business fails to meet its repayment obligations.
  • Considerations Before Signing: Before agreeing to a personal guarantee for an MCA, it’s essential to carefully review the terms of the agreement, assess the business’s ability to generate sufficient revenue to repay the advance, and consider alternative financing options that may have different terms regarding personal guarantees.

Can you get Merchant cash advance with bad credit?

Yes, it is possible to obtain a merchant cash advance (MCA) with bad credit, but it may be more challenging and come with certain considerations:

  • Focus on Business Performance: MCAs are primarily based on the business’s sales history and future revenue projections rather than the business owner’s personal credit score. If your business demonstrates strong sales and a consistent cash flow, some MCA providers may be willing to overlook a lower personal credit score.
  • Higher Costs and Terms: Lenders may compensate for the higher risk of lending to a business with bad credit by offering less favourable terms, such as higher fees or a larger portion of future sales as repayment (referred to as the holdback rate).
  • Alternative Underwriting Criteria: Some MCA providers specialise in serving businesses with lower credit scores and may use alternative criteria to evaluate creditworthiness, such as bank statements, payment processing history, or industry type.
  • Personal Guarantee Considerations: If the MCA requires a personal guarantee, your personal credit score may still be a factor in determining the terms or eligibility for the advance, even if the focus is primarily on the business’s performance.
  • Shop Around: It’s advisable to compare offers from multiple MCA providers to find the best terms and conditions that suit your business’s financial situation and repayment capabilities.