Difference Between Merchant Cash Advances & Business Loans

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Are you looking forward to expanding your company? Or do you just want to upgrade your already established business? Whatever may be the case, you will need some fast cash for that. This is where merchant cash advance (MCA) comes into play.

Best Merchant Lender in Canada

Go For Merchant Cash Advance

Ask any best merchant lender in Canada and they will tell you that MCA is a kind of financing option and differs from a business loan. For a MCA, a business is provided with lump sum money, especially when it needs it. Technically speaking, it can’t be termed as a loan. It’s a cash advance which is given based on the credit card sales of the business.

A MCA is suitable for businesses that need some capital quickly. It is considered as an alternative to traditional business loan. Unlike a loan, the approval process is not lengthy and doesn’t come with strict credit requirements.

Know About Merchant Cash Advance

A MCA offers businesses the required amount of cash provided the business agrees to make use of the future sales to pay back the advance they took. The best merchant lender in Canada or the MCA providers is not lending money; rather, they are purchasing the future sales of the business.

The cash advances taken needs to be paid off via credit card sales. Hence, every time a business gets paid via a credit card, a percentage of it would go for paying back the advances. This process repeats until the entire advance amount is returned.

Best Merchant Lender in Canada

Laws and Regulations

MCA providers don’t act like banks. As a result, the interest rate could be very high. However, the positive side is that a business in the dire need of money will get cash instantly. As there are no regulations, businesses that don’t qualify for the business loan can opt for an MCA.

Ideal for Restaurant Businesses

Restaurant businesses have high credit card sales. On a closer look, they don’t have good business credit to entitle for a business loan. For this reason, they can take help of the best merchant lender in Canada.

MCA vs Business Loan

Knowing the difference between the two is very important. This would help to decide on the best option for the business.

Time: A MCA gets instant approval; whereas, a bank loan takes a lot of time as paperwork is involved.

Approval Rates: The approval rate for an MCA is very fast. Companies that don’t qualify for business loans can opt for a MCA.

Collateral: Unlike a bank loan, there is no need of any collateral for MCA.

Repayment: The repayment is made based on the credit card sales of the business. Hence, there is no fixed date for repayment.

Experience: A business loan requires the business to be in operation for more than 5 years but for a MCA a business needs to be in operation for only 12 months.

Before seeking the help of the best merchant lender in Canada, one should know that MCA comes with its pros and cons. However, the pros outweigh the cons. It’s a personal choice if one should go for a business loan or a MCA.

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