What is a merchant cash advance?
A merchant cash advance provides a lump sum in exchange for an agreed portion of future business revenue. The agreement sets out the amount advanced, the total amount to be collected and the collection method.
An MCA differs from a traditional business loan. The name used in marketing does not replace the terms of the actual agreement.
How collection can work
Some agreements collect a percentage of card sales. Others use scheduled bank withdrawals based on estimated revenue. The frequency and amount of those withdrawals can affect your everyday cash flow.
Ask how reconciliation or adjustments work if sales change. Do not assume that every payment automatically falls when revenue falls.
What to review in an offer
- Net funds you will actually receive
- Total amount to be collected, including fees
- Collection amount and frequency
- Reconciliation terms and how to request an adjustment
- Any guarantees, security interests or other obligations
- Early settlement provisions and any discounts
When to consider alternatives
Frequent collections and a substantial total cost can make an advance difficult to manage. Consider available business loans, lines of credit or equipment financing before deciding. Availability depends on your circumstances and each provider’s requirements.
An inquiry with Skycoast is a starting point for a conversation. It does not guarantee an offer, approval or any particular funding terms.
Further reading: NerdWallet’s guide to merchant cash advances. Examples are educational and are not funding offers.