Merchant Cash Advance (MCA)

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Merchant Cash Advance

Business owners often need short term cash to fund their business. Whether you need to hire, buy or repair equipment, or get through seasonality, we can find the right funding solution for you.

A merchant cash advance, or MCA, from the LCF Group is a specialized type of business financing that is commonly used by small business owners as an advance against general accounts receivable and future sales.

A merchant cash advance is not a loan. Instead, it is a cash advance against future sales. This type of funding commonly referred to as “revenue-based funding” as it is tied to the sales revenue of the merchant.

Features:

Approval in as little as 2 hours
Funds available the next day
Low eligibility requirements

How Do Merchant Cash Advances Work?

LCF will provide a business owner with a lump sum cash advance in exchange for a fixed payback amount over a pre-determined length of time. The amounts to be paid back are calculated as a percentage of the business’s sales, including future credit or debit card sales

LCF makes repayment easy by drawing repayment amounts (known as holdback amounts) directly from the business owner’s credit card merchant account or business bank account. (Alternative payment arrangements can be made if necessary.)

Application Process

The application process is simple and our funding specialists are available to guide you every step of the way.

1 – Complete our MCA application and submit bank statements

2 – Our underwriting team will review your application and provide a decision in as little as 2 hours

3 – Our funding team will reach out to explain your MCA offer and collect a few additional pieces of information

4 – You review and sign the contact

5 – Funds will be deposited in your account the next business day

Merchant Cash Advance FAQs

What happens if my sales increase and I pay-off my MCA early?

There is no fee for paying off your MCA early. An MAC is structured so that LCF receives an agreed-upon percent of your sales revenue until the advance is repurchased. So, if your business does great, your funder gets repaid faster.

Additionally, if sales slow and your revenue goes down, so do your remittances.

Unlike a loan that charges interest, there are no additional fees if the repurchase takes longer than initially anticipated.

What happens if my sales decline?

Remittances are tied to a business’ revenues. If your sales decline, you would be eligible for a reconciliation, one of the hallmark differences between MCAs and loans. Your remittances are a percentage of your revenues, any decline may mean that your repurchase takes longer than initially anticipated. Since LCF is, in essence, your short-term business partner, they bear the risk of declining sales along with you.

How Does a Merchant Cash Advance Affect My Cash Flow?

MCAs are repaid with future sales revenue and therefore will reduce future cash flow. Remember, an MCA is an agreement to receive a lump sum cash payment for the promise to pay back a fixed percentage from your sales transactions in the future.

Why do companies need merchant cash advances?

Almost every company requires additional capital at some point to grow and expand, of even simply to survive. Cash shortages can arise due to many common business activities and it’s a normal condition of running most businesses.

At LCF we have helped businesses with all type of cash shortages. Cash shortages can be due to reduced cash flow from seasonal swings in sales, expansion, investments in machinery or to take advantage of favorable purchasing opportunities. Whatever the reason, the decision to seek additional funding should be balanced with your expectation for future growth and your company’s ability to repay the borrowed amounts.