5 Tips to Follow when Applying for a Merchant Cash Advance

As a business owner, there might be a time when you realize that you could utilize additional financing. While you probably have plenty of ideas on how you could use a merchant cash advance for your business, acquiring it can be the difficult part. Before you spend time completing an application, read this post to learn about what you’ll need to know, and the documents you’ll need to have ready to prepare your submission. Let’s get started:

  1. Ensure your industry is right for this product – Before you start your merchant cash advance application, you should contemplate whether your industry is well-suited for this product. Usually, restaurants, service businesses and retail stores are among the industries that benefit from merchant cash advances. This is because they typically receive a large amount of transactions in the form of credit card sales. A merchant cash advance is a purchase of your business’s future receivables, so you’ll need to have incoming credit card sales in order to qualify. If your business doesn’t accept credit cards, or makes a small amount of sales in this form, then you should consider a different financing product.
  2. Consider how you’ll utilize a merchant cash advance – Before applying, you should know how you’ll use a merchant cash advance. Perhaps you’re planning to start an expansion project, purchase new equipment, hire additional employees or use the money for another expense related to your industry. Whatever the reason is, you should deliberate on how much money you’ll need. Although the lender will likely be deciding how much money you qualify for, it will be helpful for them to know how much money your business is interested in receiving.
  3. Gather recent credit card statements – In order to receive a merchant cash advance, you’ll need to submit at least a few recent credit card statements. The number of statements will likely depend on the lender you’re applying to, so be sure that you read their guidelines carefully. Since merchant cash advances are a purchase of future credit card receivables, a lender will need to see the exact amount you’re acquiring each month.
  4. Determine your credit score – Once you’ve submitted your application, the lender will need to run your business’s credit. They do this to get a better idea of your business’s overall financial health. If you check your credit score, and see that it is lower than the lender’s requirement, consider applying to a different lender. If this is not an option, try and raise your credit score so that you can apply for a merchant cash advance at a later date.
  5. Be prompt – Submit your completed application and any accompanying files in a timely manner. The faster you get back to the lender about any questions they may have, the closer you’ll be to receiving your advance!

Receiving a merchant cash advance can be a constructive way to expand or improve your business. Many business owners throughout various industries have relied on merchant cash advances to sustain their cash flow needs. Hopefully after reading this post, you’ve been able to decide if a merchant cash advance is the right product for you, and will know how to prepare an application.

Katie Alteri is the content marketing coordinator at Fora Financial, a company that provides working capital solutions to small businesses across the U.S. Fora Financial can also be found on Facebook and Twitter.

Katie Alteri

Recent Posts

The Ultimate Guide to Creating a Business Plan in 2025

Can you believe it? It’s almost the end of the year! 2024 has flown by…

6 days ago

Have You Filed Your BOI Report Yet? If Not, You Should.

There has been a lot of buzz about BOI (Beneficial Ownership Information) and what it…

2 weeks ago

Stop Overthinking How You Market Your Business, Start Documenting

Many businesses make the mistake of trying to look bigger than they are, sound more…

2 weeks ago

How The Election Results Could Affect the Small Business Market

With inflation and interest rates higher than normal, small business owners watched this year's election…

4 weeks ago

How to Get Scrappy: Creative Strategies for Business Success

When the economy isn’t doing as well as you’d like, you lose a client or…

1 month ago

5 Ways Social Media Helps You Run Your Business

Social media is one of the biggest topics in business. It seems like every day…

2 months ago