What Exactly Is A Merchant Cash Advance(MCA)
A merchant cash advance is an upfront lump-sum payment for the purchase of a contractually specified percentage of a business’ future receivables. As a business owner, you sell either goods or services. Each sale that you make is called a receivable. Sales that you expect to make in the future are referred to as ‘future receivables.’ A merchant cash advance is simply the purchase of some of your future receivables, which are really speculative investments for the funding provider, for payment now.
For you as a business owner, merchant cash advances can provide the working capital necessary to pay your operational expenses, purchase new inventory, hire additional staff, or expand into new markets. For merchant cash advance providers focused on providing business owners like yourself such working capital, they’re speculative investments. Let’s say you approach a merchant cash advance provider, such as Spectre Capital Finance, for working capital. We will ask you for several months’ business bank statements and a few other pieces of information to verify your banking information and identity and determine whether your business will likely be able to generate the future receivables. Providers of merchant cash advances come to this determination based on identifiable trends within the business’ past and industry.