A Business Cash Advance is another way that people sometimes refer to working capital obtained by selling future credit card receivables. While the most common industry reference for this is a Merchant Cash Advance, it is important to realize that, when you see this funding called a Business Cash Advance, it usually means the same thing.
A Business Cash Advance is not a loan or a form of lending. Business Cash Advance providers have different eligibility requirements than you'll find with lenders, so many businesses find that Business Cash Advances are flexible and accessible options to explore.
A Business Cash Advance is based on your business' future credit card sales. Your business would sell a portion of its future credit card sales to a provider in exchange for a lump sum of working capital as the purchase price. You are typically free to spend this working capital on any business need.
To perform on a Business Cash Advance contract, your business would use a processor approved by the Business Cash Advance provider for its credit and debit card transactions. Then, as the business batches out its credit card sales, the processor would forward a fixed percentage of each batch to the Business Cash Advance provider. The percentage forwarded would not change for the life of the funding, which means your business' actual credit card sales volume would determine each amount forwarded to the provider. It also means that there is no fixed timeframe for delivery of the purchased receivables - the provider will get paid as your business gets paid. Fewer credit sales means it may take longer, while increased credit sales volume would cause your business to deliver the receivables more quickly.
In the end, whether you refer to this as a Merchant Cash Advance or as a Business Cash Advance, you are still referring to a flexible, convenient and accessible method of bringing working capital into your business.
