Merchant Advance Funding: Vital Details Every Small Business Owner Should Know

merchant advance funding

Merchant cash advance companies have proved to be passionate about assisting various business owners to succeed by providing merchant advance funding.  The majority of merchant lenders understand that business must experience some financial problems. For this reason, they have a flexible repayment term whereby the merchant advance funding remittance will fluctuate with the credit card sales Patten of your business. It is evident that your business will experience slow months at times and still have some months where sales go up. Logically, it will be hard to remit the same amount during the two periods.

For this reason, merchant cash advance lenders will have a holdback percentage. This is an agreed upon percentage that is deducted from your daily credit card receivable until you complete repaying the debt. This means that you will be paying a specific fraction of the total sales you make. The majority of small business owners prefer merchant cash funding due to lack of a set repayment schedule; thus there is that flexibility of remitting their advance based on the daily credit card sales. The moment you have high credit sales, your merchant lender will deduct high amount.

Read More: How to Get a Business Loan without Collateral

Who benefits from merchant advance funding?

Merchant advance funding is suitable for small business owners in retail, restaurant and service industries. This is for the reason that these industries are associated with a large volume of credit card transactions. Note that your business must accept credit card transaction for you to get approved for a merchant advance funding.

How to apply

Application is one of the simplest exercises in the merchant cash advance industry. All you need is the merchant lender’s one-page application and a credit card statement showing your sales in the last three months. You need to compile all the loan application documents before applying to expedite the process.


Understanding the merchant advance funding requirements before applying is vital. These requirements are readily available for any business owner who needs to responsibly and efficiently use the merchant cash advance products. The majority of merchant lenders requires a business to be in operation for at least three months to be approved for funding. This will increase your chances to benefit from various merchant cash advance products.

Another requirement is that you need to make sure that your business has a large credit card sales volume every month. If your business generates a small volume of credit card sales, completing the remittance of your merchant advance funding might be problematic for you. In this case, satisfying your obligation to pay the advance will be hard, and the merchant lenders will not want to expose the future of your business at risk.

Read More: How Merchant Funding is Changing the Face of Small Businesses

Final word

Note that the merchant cash advance industry is flooded with merchant lenders who are willing and ready to offer a merchant advance funding. For this reason, make sure you make your choice wisely. Look at the amount of money they want to deduct from every sale you make. If you realize that the interest rate is high, move to the next provider, since other service providers will provide better rates.

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