Time is precious. No one likes uncertainty.
So you have just read the first article on about what Merchant Cash Advance is. Now you must be wondering if you may be eligible for one. “I want cash that I can use now and propel my company to success but...would my credit score hinder my chances to get an approval? What if my deposits are too low?”. Well, that is why this article is written. It gives an overall big picture of what Merchant Cash Advance (MCA) companies would ideally like to see in when they underwrite an applicant’s request for funding.
Are you eligible for an MCA? Here’s what you need to consider:
Consistent Monthly Bank Deposits
A lender wants to see that a prospective merchant has a consistent flow of deposits. Why is that? It shows to them that not only is your business active, it gives them a clear picture of your finances so they can better assign a plan that fits your business. MCA companies, like Wide Merchant Group, make predictions of what you’ll earn in the future so that if you get approved, you are able to pay back without affecting your business. Consistent deposits are huge and is often one of the best indicators of a healthy business. Notice that we didn’t say high deposits. While the deposit has to be reasonable, we don’t expect it to be $100,000 every month. Deposits can be low but it is way more beneficial if they are consistent. A good MCA company will still work with you if they see that you’re able to afford a recurring repayment plan.
Unique Business Profile
There are many factors that lenders consider before they make an approval decision. Lenders understand that not all business are the same; that a flower shop's sales may peak during spring and that they have lower deposits in the winter. They also understand that the location where the business is located also has a great impact on your deposits. Before a lender makes a decision, they want to know that you will be able to afford a repayment plan during your off season. Are you an ice cream shop located in Florida or in Seattle? A lender will expect an ice cream shop to have lower sales during the winter, if located in the northern part of the US. This is because most people will not crave ice cream during colder months. Ideally, a lender wants to fund merchants that have a constant flow of deposits, despite of the season and location. While many MCAs may decline merchants whose deposits are not ideal, lenders like Wide Merchant Group, who specialize in taylor-made Advances for smaller merchants, may still get you approved.
Perfect Credit Score Isn’t Required
One of the main reasons merchants are denied for traditional business loans from their financial institutions is because they lack a stellar credit score. Most MCA companies understand that there’s more to a merchant than a 800 credit score. That’s because a score is just a number that often tells an overgeneralized idea of how a consumer makes financial decisions. Say that you finance a vehicle and have only missed three payments in three years. Because payment history accounts for 35% of your FICO score, having some late payments will bring your score down, which will give the impression to financial institutions that you’re at high risk of missing payments. Companies like Wide Merchant Group, on the other hand, don’t care too much that you missed three payments; they look at the fact that during three years you were able to make consistent payments to keep your vehicle. MCA companies look deep into your credit history for patterns that show that despite of not having a perfect credit score, you are able to make responsible financial decisions.
Do you hate paperwork? So do MCA Lenders!
Banks are notorious for requiring a lengthy amount of documentation before they can make a decision on a loan. MCA Lenders take a modern approach to underwriting that requires minimal paperwork from the applicant, and relies on behind-the-scenes investigative reports to make a better underwriting decision. Generally, most MCAs will initially require an application and 3 of the business’ most recent bank statements. Once the application has been pre-approved, a signed contract will be required along with the transaction history that shows transactions so far in the current month. This strategy has another benefit that is often overlooked by many applicants—the process time! Because MCA companies require less documentation, the amount it takes to get you funded may only take a couple of days instead of taking several weeks, as it is the case with most banks.
Do you want to have a personal experience? We will be there!
MCAs like Wide Merchant Group are also able to personally work with you. Big banks often have many employees who will not remember all of their clients. But MCAs aren’t like that. We are able to personally communicate with you directly and work with your needs. This is a huge advantage because we are able to know you, and your business on a more personal basis. So we understand how your business really operates. We also always encourage the customers to call us or email us because again, we strive to be a personal company. MCAs aren’t huge institutions like banks that have too many customers to personally serve each of them. So it is a great idea to take advantage of this feature that you can’t get from a bank.
In Summary, if you meet these requirements, you will be perfect for an MCA.
- Want fast funding with no delay.
- Don’t want to deal with banks or have been rejected in the past
- Don’t have a perfect credit history
- You don’t want to deal with mountains of paperwork or impersonal employees.
So applying for a Merchant Cash Advance doesn’t have to be a daunting experience for merchants. In fact, the industry was created with the premise of quicker turnaround and more convenient service by eliminating the many paintings that most merchants experience when attempting to get additional business funding.