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Merchant Cash Advance Reviews

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  • Yellowstone Capital Review

    Read Review Compare Not Yet Rated

    Yellowstone Capital provides non-collateralized funding to small businesses through their ISO (Independent Sales Organizations) partners. Their shockingly high rates, lack of transparency, and inconsistent customer service makes them not worth considering unless you’re completely out of options.


    Minimum Time in Business:
    Less than 1 year
    Required Annual Revenue:
    Less than $100,000


    Borrowing Amount:
    Less than $50,000 up to $1,000,000
    Time to Funding:
    1 day - 2 weeks+

  • The Business Backer Review

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    The Business Backer is a small business funder that offers merchant cash advances (MCAs) to businesses with poor credit. Their transparency, process, and customer service make TBB one of the better options when it comes to MCA funding. Be cautious of their high factor rates and additional fees.


    Minimum Time in Business:
    1-2 years
    Credit Score:
    550+
    Required Annual Revenue:
    $100,000+


    Borrowing Amount:
    Less than $50,000 up to $250,000

  • National Funding Review

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    National Funding is a lender that provides funding to small businesses that cannot yet get a bank loan. They provide reasonable rates for an alternative lender as long as you fall on the lower range of their factor rates and origination fees.


    Minimum Time in Business:
    1-2 years
    Credit Score:
    600+
    Required Annual Revenue:
    $100,000+


    Borrowing Amount:
    Less than $50,000 up to $1,000,000
    Time to Funding:
    1 day - 2 weeks+

  • Rapid Finance Review

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    Rapid Finance is an alternative small business funder offerinf merchant cash advances and short-term business loans to small businesses seeking short-term funding. Rapid has a quick and easy application and approval process. It is still an expensive way to borrow money.


    Minimum Time in Business:
    1-2 years
    Required Annual Revenue:
    Less than $100,000


    Borrowing Amount:
    Less than $50,000 up to $1,000,000

  • Snap Advances Review

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    Snap Advances LLC provides merchant cash advances (MCAs) to small businesses seeking short-term funding. Though officially headquartered in Salt Lake City, UT, the company also has an office in Valley Stream, NY. MCAs tend to operate in a sort of gray area and---though legitimate and legal---should be approached with caution. Before diving into the world of MCAs, we first encourage you to take a look at our short-term funding comparison chart and make sure you don't qualify for more traditional sources of capital.

  • Lendio Review

    Read Review Get Started

    Lendio is a business financing platform that matches customers to funders. It has a relaxed credit score requirement and there’s no fee for using the service.


    Minimum Time in Business:
    1-2 years
    Credit Score:
    650+
    Required Annual Revenue:
    Less than $100,000


    Borrowing Amount:
    Less than $50,000 up to $1,000,000
    Time to Funding:
    1 day - 2 weeks+

  • ForwardLine Review

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    ForwardLine is an alternative lender that primarily serves small businesses. ForwardLine serves a particular niche–profitable small businesses with bad credit–and serves it quite well. They have relaxed credit score requirements and an easy application process.


    Minimum Time in Business:
    1-2 years
    Credit Score:
    600+
    Required Annual Revenue:
    $100,000+


    Borrowing Amount:
    Less than $50,000 up to $1,000,000
    Time to Funding:
    1 day - 2 weeks+

  • BFS Capital Review

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    BFS Capital offers short-term loans and merchant cash advances. Despite their relaxed qualifications requirements and fast application process, the fees might be expensive for some businesses. BFS Capital is best for merchants who need capital in a hurry or cannot get financing elsewhere.


    Minimum Time in Business:
    1-2 years


    Borrowing Amount:
    Less than $50,000 up to $1,000,000
    Time to Funding:
    1 week - 2 weeks+

  • QuarterSpot Review

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    QuarterSpot is an online lender that offers a short-term loan product. It is ideal for businesses who plan on repaying the loan before their term is up. They are worth considering if you need capital but don’t have access to less expensive financing options.


    Minimum Time in Business:
    1-2 years
    Credit Score:
    550+
    Required Annual Revenue:
    $100,000+


    Borrowing Amount:
    Less than $50,000 up to $250,000

  • Capify Review

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    Capify is a merchant cash advance service and alternative lender. Capify specializes in providing working capital to businesses with poor credit but good cash flow. While Capify is a legitimate lender, they have expensive terms and fees and not suitable for seasonal businesses.


    Minimum Time in Business:
    1-2 years
    Credit Score:
    500+
    Required Annual Revenue:
    $100,000+


    Borrowing Amount:
    Less than $50,000 up to $1,000,000
    Time to Funding:
    1 week - 2 weeks+

This category covers two types of business financing—merchant cash advances and short-term loans. Although legally they are different products, in practice the two act very similar; most MCA companies offer both products to their customers.

What is a Merchant Cash Advance?

A merchant cash advance (MCA) is a type of business funding. This type of funding is not a loan, but a sale of future receivables. In other words, the MCA company (the buyer) is purchasing the future revenue of a business (the seller) at a discount.

Fees for borrowing are calculated using a flat fee multiplier, sometimes also called a “buy rate” or “factor rate.” The total repayment amount is calculated by multiplying the borrowed amount by the fee. For example, a merchant with a borrowing amount of $10,000 and a flat fee of 1.3 will have to repay $13,000 (10,000 x 1.3 = 13,000). This fee may also be written as a percentage (ex: your fee is 30% of the borrowing amount), but should not be confused with an interest rate.

Flat fees for MCAs generally range between 1.1 and 1.6 depending upon the MCA company, the strength of your business, and other factors.

Repayment is made by collecting a certain percentage of each sale; this percentage is called the withholding rate. For example, the MCA company might collect 15% of every sale, meaning for every dollar processed, the MCA company will get $0.15 and you will get $0.85. There are three different ways an MCA company can collect their cut:

  • Split withholding: The MCA company will partner with your credit card processor. When your processor receives a payment, they will automatically route the MCA company’s percentage to the company, and your percentage to your business bank account.
  • Lockbox withholding: The MCA company will set up a bank account in your name, but which they have access to. Your business revenue will go into this account, and the MCA company will deduct their cut at the end of each day before sending the remainder to your regular business bank account.
  • ACH withholding: The MCA company will deduct their percentage from your business bank account each day via automated clearing house (ACH), a type of electronic network used to transmit money between bank accounts.

Because your repayment fluctuates according to cash flow, merchant cash advances do not have a set maturity date. However, most MCAs are designed to be repaid in less than two years if your cash flow remains consistent.

What is a Short-Term Loan?

A short-term loan (STL) is very similar to a merchant cash advance. Unlike the latter, a short-term loan is (as one may guess) technically a true loan. In exchange for taking on debt owed to the company, you get access to immediate funds for your business.

Fees for borrowing are calculated as they would be for a cash advance. You are assigned a flat fee multiplier which determines your total payment amount. If you have a fee multiplier of 1.15, and you are borrowing $150,000, you will have to repay a total of $172,500 (150,000 x 1.15 = 172,500). Flat fees for these products normally range between 1.1 and 1.6 (or, in other words, 10% – 60% of the total borrowing amount).

Repayment is made on a daily basis by deducting a fixed amount from your bank account each business day via ACH.

Because the lender knows how much they’re deducting from you every day, there is a set date at which you will be done making payments (assuming you never miss a payment). Most short-term loans are repaid in under two years, though some lenders are beginning to offer term lengths up to three years to qualified borrowers.

Questions to Ask Before Borrowing

Some types of funding, especially merchant cash advances and short-term loans, are notorious for sending inexperienced businesses into financial difficulty. Because short-term funding tends to come with high fees and short repayment schedules, some businesses may suffer from the rate of repayment.

Before you accept an offer for short-term funding, ask yourself (or your funder) these questions:

What is the APR? What is the cents-on-the-dollar cost?

Because this type of financing is so unusual, it can be difficult for business owners to understand the costs. In order to fully understand the cost of borrowing and compare offers, it’s best to calculate both the APR and the cents-on-the-dollar cost.

The annual percentage rate (APR) communicates the cost of borrowing over the course of a year. Because short-term funding often runs less than a year, and the APR calculates the cost of borrowing over a whole year, the APR may appear quite high.

The cents-on-the-dollar cost, on the other hand, communicates how much you are paying in fees per dollar borrowed. Here is an easy way to calculate this number:

total fees / borrowing amount = cents-on-the-dollar

For example, if you are borrowing $10,000, and have a total repayment amount of $12,000, your cents-on-the-dollar cost is $0.20—you will have to pay $0.20 in fees for every dollar borrowed.

The APR and cents-on-the-dollar cost can help you understand the cost of potential funding options and easily compare offers.

Can my business operate under the reduced income?

If you accept a merchant cash advance or short-term loan, you will be operating at a reduced income. Take the time to consider whether or not your business can handle the daily payments. Will you have enough money to pay your other debts? Do you have a safety cushion in the event that your cash flow drops or unexpected expenses arise?

Does the funder offer early payment discounts?

Because short-term funding does not technically charge interest, you cannot save money on interest by repaying early. Some funders, however, do offer a discount on the fee for businesses that repay early. If you think that you are likely to repay before your maturity date, find a funder that offers a discount.

Unfortunately, because merchant cash advances do not have maturity dates, funders do not normally offer discounts on cash advances for any reason.

What is the funder’s policy on late payments?

No business can predict everything that may happen in the future. It’s important to find a funder with a generous late payment policy in the event that you run into unexpected difficulties in your business or personal life and find that you cannot make payments for a time. Many funders are willing to defer payments or work out an alternate schedule if you experience temporary difficulty.

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