One of the major problems faced by small and startup businesses is a lack of funds. Shortage of capital prevents these businesses from continuing their operations. Some resort to borrowing funds from various creditors just to have the funds they need. Creditors may include individuals, lending companies, or financial institutions.
Loaning funds from these creditors can be easy. They only require documents such as proof of income, valid identification cards, and proof of address to apply for a loan. However, high-interest rates are imposed on top of the principal loan amount.
What is an MCA
Merchant cash advance or MCA is a structured lump-sum payment in exchange for a percentage of a business’ debit or credit card sales. An MCA is not a loan, which is why it is often misunderstood and has a negative connotation for some. However, it may be helpful in providing companies with the funds that they need to continue their business operations.
Not all businesses can be eligible to apply for MCAs. They should be able to meet specific criteria:
- The business must be able to support debit or credit card sales.
- The business must provide its three-month sales report.
- The business must show proof that it can pay back the sum.
If your business can meet the criteria, the lender can give you the funds you need.
Pros of MCA Leads
Merchant cash advance leads provide businesses with many benefits. These benefits include:
- Fast and convenient. MCA leads are some of the quickest ways to get funds for your business. You just need to prove that you can pay back the money you owe and you will receive the funds you need within a week or two.
- No risks of losing assets. No collaterals are involved with MCA leads because this is a type of an unsecured financing option. There is no fixed payment, just the percentage of your credit or debit card sales.
- Payment is dependent on the sales. This type of financing accepts a fixed percentage of your card sales. Therefore, if your debit or credit sales are low, your payment is low as well. However, if the sales are high, your repayment amount is also high.
Cons of MCA Leads
MCAs leads are not all butterflies and rainbows. In fact, you should be wary of some things. Some of the downsides of MCA leads are:
- Confusing contracts. The MCA contracts may be complicated if not adequately explained. The repayment computations generally need a thorough explanation so both parties can avoid any misunderstanding.
- High-interest rates. This type of financial option may provide convenience because of its fast approval, but it comes with a price – a high price. The interest rates are usually higher because the annual percentage rates normally range between 40% up to 350%.
- Higher sales mean higher repayments. As stated earlier, the amount you have to pay will depend on the amount of your total debit or credit card sales. Therefore, if you have a high volume of card sales, you are required to pay a higher amount, depending on the stipulated percentage.
How Can MCA Leads Help You?
MCA leads can help businesses acquire funds when they need them. They no longer need to wait for months before they receive the results of their application. Instead, they can receive the approval and the cash advance in weeks. As a business owner, you should weigh your options before making the final decision of getting MCA leads.
With over 10 years of experience in the Financial Sector, Oguz understands the unique challenges and opportunities Financial Service Providers face every single day.
He has developed and perfected a comprehensive blueprint that helps businesses create, automate and scale their entire MCA leads generation, marketing and all of the client acquisition strategies.
He is the best selling author of 2 books, international speaker, has been coaching hundreds of business owners on small business success and marketing. He’s a coffee connoisseur, a bookworm, father of 2 and Tofu.