Merchant Cash Advance(MCA) For Retail Businesses

To thrive in today’s constantly evolving and highly competitive retail industry, a retail store owner needs substantial working capital and a constant cash flow. Most advanced equipment, a good stock of inventory, highly skilled sales executives and a suitable premise are the four pillars of a prosperous retail business. Rapid digitalization has given birth to the concept of the online retail business model, which is being adopted by most offline retailers, who once used to sell only from physical stores. https://zeropointfinance.com/merchant-cash-advancemca-for-retail-businesses/ Adopting this model often turns out to be beneficial for the retailers as they can cut down the expenses of hiring, training in-store sales executives and showroom rent or maintenance charges, in the case of owned property. All they have to pay for are the warehouse, the inventories, website maintenance, digital marketing and of course delivery. However, like offline retailers, online retailers also go through dips in cash flow, which often makes it difficult to pay essential business operation bills. Sometimes, sudden breakdown of equipment, need for an immediate store renovation or inventory acquisition etc., retailers, both online and offline, look for financial support. This is when financers step into the scenario. Business financers can be banks as well as non-bank lenders. But, when it comes to small to medium retailers, bank loans often do not turn out to be a quick and convenient business financing option. For a retailer looking for fast funding, the retail store cash advance is a viable financing option.

Unlike a traditional business loan, a retail Merchant Cash Advance(MCA) is the sale of a specific percentage of the retail business’s future revenues, in return for a lump sum amount. Technically, a cash advance is a way of getting funds by selling a portion of the future revenues at a discount. Generally, the borrower doesn’t get a full advance amount for the receivables being sold. Instead, he/she receives around 70% to 90% of the receivables’ value. To apply for a retail merchant cash advance or retail cash advance, the borrower needs to submit a basic credit application, besides recent bank statements and merchant credit card processing statements, for analysis. In the case of retail cash advances, documents are reviewed quite fast, mostly within a couple of hours. Once the review is done, the financing company shares its decision on going ahead with the application. If the application is approved by the lending company, the applicant receives an offer that comprises the funding amount, rates, terms and type of repayment. Once the borrower accepts the offer, he/she receives a contract along with a list of stipulations, required before funding, from the financer. After the contract is signed by both the borrower and the retail cash advance provider, funds are directly transferred to the borrower’s business account. Usually, the entire process doesn’t take more than 3-4 days, but in some cases, where the documents are provided on time, fund disbursement takes place within 24 hours of the application. Hence, the retail cash advance is often considered a same-day funding option.

Entrepreneurs, looking to expand their businesses or perform day-to-day operations, often opt for business loans. But, it is very important to choose the right financing option.