The merchant cash advance is still an extremely new financial solution, particularly in Canada. Business owners have become accustomed to the fact that, if they need a loan, they need to head to the bank. That’s no longer the case, but there are still a lot of questions that people have about this instrument.
The first question we get from our clients about merchant advances is the amount of money that they can get. Once they get a number, they start to think of things they could do to expand and enhance their business if they had greater liquidity. Even though a merchant advance requires significantly less paperwork (and shorter approval time) than a traditional loan, it makes sense that a business owner would like to know how much money an advance would provide before starting the process.
This number is not going to be the same from one business to the next. Merchant advance amounts are based on three numbers: your business’ percentage of sales that are cash, average monthly sales volume through debit or credit cards, and net income margin (what you have in the bank after you’ve paid your bills, calculated as a percentage of your sales). The good news is that our representatives have the tools they need to provide you with your likely merchant advance amount as soon as you provide those three numbers.
Why do we want to know how much money you make from cash sales and what your net income margin is? We do not want the payments you make back to us to repay the advance to leave you unable to meet the day-to-day needs of your business. There are some companies who simply set the repayments as a set percentage of your credit and debit card sales each month, but the problem with that is that Company A might bring in $10,000 a month in card sales as part of $15,000 total sales. Company B might bring in $10,000 a month in card sales, just like Company A, but their monthly total sales might be $20,000 total, so they are bringing in half from cash. Company B can afford somewhat higher repayments so they could gain approval for a larger merchant advance than what Company A might be able to receive. Company B does not have to take the full amount approved, but they would have more flexibility on the basis of their larger cash sales.
This is why you have to pay attention to the numbers. There are some merchant advance providers who will lock you into situations where you end up with negative cash flow. While you might end up with a larger advance up front, you will also end up with payments that could force you into an uncomfortable financial situation, making things worse than they were before. We want our clients to be able to put this money to use – and to flourish after they have paid back the loan. We get the majority of our business from word of mouth, and we work with our business clients to put together the best combination of cash up front and payment plan so that the cash advance ends up turning into a win-win.
Once you receive the advance, you make payments as an agreed percentage of your credit and debit card payments each business day. We don’t set a set payment amount but instead use a percentage so that you don’t end up in the red on slow days. On your flush days, you’ll end up paying back more than you do on the slow days.
Merchant cash advance qualifications
We have a handy quote form that you can fill out to determine what you might qualify for as a total advance amount. You can also give one of our merchant advance experts a call at 1-877-756-1119. We can help businesses in Canada get through a tough financial patch with relief, in the form of quick cash, without some of the crippling repayment terms that some of our competitors offer. After you fill out the application, expect us to contact you within 24 – 48 hours.