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Merchant cash advance with bad credit? No problem!

While running a business, whether you are a start-up or experienced, the need for money may arise at any given moment. Especially when you have a small business or a start-up the need for business funding may arise any moment without fore warning. In such situations, considering a bank loan often involves long procedures, lengthy paperwork, and no assurance if the loan would be approved.

And in all of this, if you have a bad credit, you can be sure your attempt will practically go waste. So when a small run business with a bad credit requires money on a short notice, what does one do? Merchant Cash Advance is one solution to such a problem.

What is a Merchant Cash Advance?

A Merchant Cash Advance (MCA) is not a loan; it is simply advance money that you receive as opposed to the payments you accept via credit cards. It is an easier bank loan alternative that is open to various small businesses. The key features of a Merchant Cash Advance is that

  • Take lesser time to process and disperse the amount

  • Lesser paperwork

  • Higher acceptance rate

  • The hold-back rate which is the amount from your credit card revenue the MCA providers withhold as a payback for your MCA, is in sync with the credit card revenue you make in that month, so if you are having a slower business, your hold-back will be lesser.

  • The Rate of Interest is much higher than traditional loans

This kind of a cash advance may not be the best option for all kinds of loans, but sometimes using your future credit card revenues seems like a feasible option.

High Risk Business needing Merchant Cash Advance?

A traditional bank loan or even a MCA provider would consider certain factors before considering your application or considering the rate of interest the return time frame they set for you:

  • The kind of business you are in. If you are dealing in business that involves more chargebacks, your business is likely to be termed as ‘High risk’

  • How long you have been running the business.

  • The kind of revenues you seek from the business, (Your credit card transaction flow and revenues in case of MCA)

  • Your personal credit score, with a bad credit score, you are likely to be considered as high risk.

Do High Risk Businesses never get MCA?

That is not true. If you search, there are many MCA providers like us, who take each case as an individual notwithstanding any previous history of bad credit. We also consider small businesses as they are even if they are start-ups.

We differ from the others in many ways that include our 3rd party processors and offshore banks which give us the liberty to consider high risk cases.

What are the qualifications required for a MCA?

Though the process for a MCA is relatively easier and takes lesser time, they also have a high acceptance rate. Still, there are certain criteria which must be fulfilled before a MCA can be dispersed on your merchant account. Individual MCA providers may have different specifications however the broader picture is as below:

  • One must have a certain amount of credit card transactions. For the MCA to be sure that you will be able to payback in terms of hold-back of credit card revenues, your credit card revenue collection must meet their minimum requirements.

  • You must not have a simultaneous loan going on with any other MCA provider

  • Though not very stringent, but MCA providers would expect you not to have any other ongoing collateral commercial loans on your business property.

  • You will need to have financial data to prove your monthly credit card transactions along with receipts. Though a MCA provider may not be very curious about your bad credit, but they will always need your credit card transaction receipts to ensure you have a steady flow of credit card revenue.

More about MCA

A MCA as mentioned earlier is not a loan but is an advance of the revenues one would collect via credit card transactions in future. These revenues are then held-back by the MCA as a form of payback of the advance of cash received against these transactions.

This technique is most useful in case of a small business that requires urgent money and does not possess the resources to apply for a traditional bank loan. This could range from a bad credit or High NSF (Not Sufficient Funds). MCA also ease the hold-back in accordance of the monthly revenue, so a poor month business wise will in effect have lesser hold-back.

The limitation of a MCA is its high rate of interest. The hold-back may vary according to

  • The kind of money the business deals in

  • The time the business will probably take to repay the loan

  • What kind of revenue the business receives in terms of credit card payments.

Choosing the right MCA provider

There may be many MCA providers who may allow you to take advantage of MCA, for your small business despite having bad credit. But while choosing the MCA provider for your case is important. Choose the one who provides flexibility in payment, has less or no application fees, and less or no set-up fees, allows multiple underwriting banks, and above all has friendly customer support staff.


Citi Wide Merchant Funding

300 Carnegie Center
Princeton, NJ 08540

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