07 Oct Merchant Cash Advance, Credit Card Advance, And Lock Box Funding

Merchant Cash Advance, Credit Card Advance, And Lock Box Funding

The Inside Scoop- WHAT IS A MCA? The Three Types of an MCA- Merchant Cash Advance, Credit Card Cash Advance ( Credit Card Processor Business Loans), And Lock Box Funding ( Are they Business Loans ?)

1st Position Loans, 2nd to 7th Position Loans Also Known as “Mezzanine Financing,” and MCA Consolidation Loans. The Ins, Outs, and Differences Explained Below-

A US Fund Source Funding Specialist can help walk you through all of this information. If you are looking for a consolidation of your current loans to get yourself into a better cash flow situation or if you are looking to take an additional working capital product, we are here to help.  Call us at 561-770-3331 or email info@usfundsource.com today.

 

A merchant cash advance or business cash advance ( cash advance for business ) is a form of business financing in which a lump-sum payment is financed to a company in exchange for an agreed-upon percentage of future revenues or credit card sales. The amount paid back is a fixed one. Repayment is made via ACH directly from your business checking account, or it is paid back from your credit card sales directly or through what is called a lockbox. Merchants can also take three different forms of unsecured funding noted below.

–A 1st position advance ( Also referred to as A Paper )

-A 2nd position advance (Mezzanine Financing or B/C Paper)

-An MCA Consolidation ( Payoff of existing lenders into 1st, 2nd, or 3rd position depending on the number of current advances ).

 

Merchant Cash Advance: Do good deals exist?

 

When merchants need quick working capital, look no further than US Fund Source and its extensive network of lenders and numerous financial instruments. Whether a business is on the path of success or not, merchants that take out enterprise loans usually are charged excessive rates, asked to sign over collateral, or personally guarantee the funds. US Fund Source does not require this. We charge as low of a cost as possible to solidify a long term relationship with the borrower. Our goal and focus is to provide merchants with capital at the cheapest rate reasonable so that the relationship will grow over time. The borrower, in turn, makes more money off of the capital US Fund Source provides, and then USFS turns profits over the long term business.

 

What Is A Credit Card Cash Advance?

A credit card cash advance is a short term loan that is paid back directly from the revenue driven from your credit card sales, where your processing company pays the lender directly. US Fund Source is able to “Split” with many credit card processing systems such as First Data or Integrity. In such a case, if the loan were paid back at a 10% holdback, then 10% of your sales would go directly to the lenders account for repayment, and 90% of sales would be sent to your account as they usually would.  However, if a direct split is unavailable, a lockbox funding would be required.

 

Credit Card Advances include the Following

Funding Amount: $X.XX

Fees: Fixed Amount or Percentage of Funding Amount or $0.00

Net Funding Amount: Funding Amount Less Fees

Remit Percentage (Max Holdback): % Indicated ( Normally between 6 and 25% ) Sales directed toward repayment

Total Payback Amount: Funding Amount times Factor Rate ( Ranges from 1.09-1.49 )

Estimated Term: Estimated Repayment Term Length Based on the last 90 to 365 Days of Sales Activity

 

What is Lock Box Funding?

Lockbox funding is almost the same thing as a credit card cash advance. However, if a processor does not split directly with lending companies, then a lockbox account will have to be set up. Typically this delays your credit card deposits by one day. In turn, when you make credit card sales, they will all be deposited into a lockbox account. In turn, the lockbox account will then distribute X% holdback to the lender and the remaining X% of sales to you the borrower in repayment of the total payback amount.

 

Lock Box Funding Consists of the Same Contract Features as a Credit Card Cash Advance

Funding Amount: $X.XX

Fees: Fixed Amount or Percentage of Funding Amount or $0.00

Net Funding Amount: Funding Amount Less Fees

Remit Percentage (Max Holdback): % Indicated ( Normally between 6 and 25% ) Sales directed toward repayment

Total Payback Amount: Funding Amount times Factor Rate ( Ranges from 1.09-1.49 )

Estimated Term: Estimated Repayment Term Length Based on the last 90 to 365 Days of Sales Activity

 

What is the importance of MCA (Merchant Cash Advance)?

 

A merchant cash advance or cash advance for business is also known as ACH business funding. Business working capital loans are most important because of the speed and simplicity of the financing, unlike other financial products.  Strict credit necessities, intensive evaluation of taxes, bank statements, and complicated contracts make it tough for smaller or excessive-threat merchants t᧐ acquire enterprise funding from banks. This makes an MCA or merchants cash advance a great alternative product. There are several things that merchants can do to avoid fees.

 

What to do to avoid merchant cash advance fees?

 

Working with the right lender is the #1 way to avoid unnecessary fees when it comes to taking a merchant cash advance. Some brokers will charge high-interest fees, etc. Do your research by looking into companies’ reviews. As a 5 Star Trustpilot Reviewed and 5 Star, Google Reviewed Private Financial Institution US Fund Source is a customer service leader in the financial industry.

 

While borrowing or paying back a merchant cash advance, you should also be cautious to avoid expensive fees due to missed payments or bounced ACH transactions. This can create costs from a lender as well as your bank! When a payment, check, or authorization is written for а purchase order that’s larger than the amount of funds available, an overdraft fee is charged, and the establishment covers the overdraft.

 

As a general tip, if there is not enough money in your business checking account to cover a transaction, linking your account to overdraft protection is a simple fix. Also, by automating the technique of checking balances by way of e-mail or text alerts, merchants ᴡill get notified when an account goes below а specific limit. Merchants should set up low stability alerts if their financial institutions provide them. Finally, when an overdraft happens, merchants that deposit cash rapidly can typically prevent charges.

 

When you’re running a small enterprise or business, it is tough to always have enough cash on hand.  Whether you are a small retail business proprietor, mid-sized corporation, or run a small mom and pop business, acquiring finances, tⲟ pursue your passion should not be an uphill battle. US Fund Source will get you approved quickly and smoothly for your B2B, eCommerce, or Retail business at the most competitive rates. To acquire enterprise funding, start the process right now by filling out our simple one-page application.  Though no approvals are assured, US Fund Source promises а hassle-free process. USFS makes it easier to get merchants what they need when they need it.

 

The MCA approval course offers high approval rates, and offers are generated within hours of applying. If accepted, merchants can complete a simple online checkout process to have the funds wired to their account as early as the same day. The borrower will then also have access to an online portal where they can monitor their balances and payment history. 24-7 account access provides full transparency and comfortability

 

Working Capital and the Differences between 1st Position Business Funding, 2nd-7th Position Business Funding (Mezzanine Business Funding), and MCA Consolidation Loans?

There are numerous types of small business loans, not only lines of credit, but those we might lump together as “working capital” loans. They all provide cash you can use for any business purpose. You can pay for everyday or unexpected expenses. Get ahead or keep from falling behind.

Working capital loans are different from traditional Term Loans from a bank. Term loans provide a single, large sum of money for a specific long-term investment – buying real estate, heavy equipment, etc. Because you’re borrowing a lot of money, you have several years to repay. Payments are a fixed monthly amount. Payments include interest, but you may also have to pay fees or closing costs. Term loans typically have higher interest rates than a business line of credit. But lower interest rates than working capital loans.

 

Some examples of working capital loans or merchant cash advances include:

• 1st Position Funding – 1st Position Merchant Cash Advances or Working Capital Loans are the cheapest and usually carry the best rates, terms, and repayment options available.
• 2nd-7th Position Funding – 2nd Position Merchant Cash Advances and Business Funding takes place when a borrower already has an outstanding business loan. It is also referred to as mezzanine financing or subordinated business debt.
• MCA Merchant Cash Advance Consolidations – Consolidation of current merchant cash advances ( Daily, Weekly, or Credit Card Holdback) into 1st, 2nd, or sometimes even 3rd position. These advances are typically limited to paying off three positions in total unless you participate in a reverse consolidation, which is a costly alternative to a merchants cash advance consolidation.

Working capital loans give small businesses alternatives to bank loans. It is easier to qualify, and the application process is far more straightforward. And very fast – you can get the money you need within a few days. Repayment depends on the type of financing, but here at US Fund Source, we also give you options. We know a business loan can’t help if it’s not affordable.

Positive working capital is essential for your company to meet its continuous operational needs. The availability of working capital influences your company’s ability to meet its trade and short-term debt obligations, as well as to remain financially viable. If your current assets do not exceed your current liabilities, you run the risk of being unable to pay short term creditors in a timely fashion.

It’s time for a small business loan. But which one? You’ve heard a lot about business lines of credit and working capital loans. What’s the difference?

With the right small business loan, you can look forward to good things for your business. Not only a more significant financial stability but a stronger competitive advantage. With those, your business can grow, just as you’ve always dreamed.

 

Contact US Fund Source Sales Team at 561-770-3331 today!