Merchant Cash Advance FAQs

There are a variety of reasons a company would choose Merchant Cash Advance (or MCA) over more traditional financial products. MCAs have a faster turnaround time, which lends well to expansion or rapid scaling. Some businesses use their advance to bring on new employees to handle an increase in volume or to buy new equipment to help them take on big jobs. Some need to make expensive repairs quickly in order to continue operating their business.

And some simply prefer the shorter payment terms and the flexibility that MCAs provide.

Loans have an interest rate, and the amount paid is dependent on how quickly it’s paid in full. The payment is generally fixed for the entirety of the loan, and that is not true of MCAs. For MCAs, the daily or weekly debit amount is flexible since MCAs are only taking a percentage of the business’s overall sales. So if your revenue is down, we can adjust your payment amount accordingly. Any transaction that is financial in nature and has a mutual agreement in place has the ability to affect one’s credit through a default process, if awarded by a judge.

That being said, MCA itself is not usually reported to credit bureaus in the same manner as more traditional financial products. First off, there is a factor rate. As I mentioned earlier, an MCA is not a loan. It doesn’t accrue interest, there is no APR. However, it does bear what we call a factor rate, which will fluctuate from one funder to another.
All MCAs have a factor rate.

The best way to ensure that you’re getting the best rate is by shopping around. Be careful, though. A lot of funders out there will pull your credit score in order to get you a quote, which could damage your score if multiple funders are doing that. To find out if a funder plans to pull your credit, simply ask them.

They are legally required to tell you. We do not pull credit here at Elevate Funding, and we’ll touch a little more on that later. There’s also commission. Keep an eye out for the commission amount your broker receives. At Elevate, when we bump up broker commission, it doesn’t come out of your pocket.

Their commission bonuses don’t compromise our valued clients getting the best rates possible. Finally, there are funding fees.

Funding fees are the cost that the funder incurs while helping you get funding. This typically includes the use of third-party vendors. At Elevate, we keep these fees simple.

For advances over $6,500, we charge a flat $500 fee, * which covers your Lockbox or ACH. We even waive this fee for advances under $6,500, and we charge no funding fees for clients making payments directly from a supported credit card processor. The short answer is yes, you can still get approved even if you have bad credit. MCAs are more forgiving of past financial rough patches, whether that’s no credit, bad credit, bankruptcies, liens, judgments, foreclosures, criminal charges.

At Elevate, we believe that your success as a company lies in your current performance and revenue, and we don’t necessarily think that we should go poking around in your past.

Our applicants generally get approved (or denied) within 24 hours of submitting all required documentation. Once you’re approved, your funds can hit your account as soon as the next business day. When you take out funding with us, you sign a Future Receivables Sales Agreement (FRSA). This agreement states that your sales performance will be re-evaluated on a regular basis to ensure that your daily payment amount is in line with the agreed-upon daily payment percentage. If your sales have deviated, we will adjust your payment amount accordingly.

We even offer a self-service feature, allowing you to expedite this review process all on your own. Our Flex Funds programs offer clients the ability to take an add-on up to 30% of their original funding amount after three weeks of consecutive payments. We also allow eligible clients the chance to renew their advance once they are 55% paid in on their current advance. This gives you the peace of mind and assurance that the funding you’ll need soon is lined up and ready to go.

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