High Approval Rates:  Funding companies that provide merchant cash advances can approve businesses that banks decline and usually value retail businesses like restaurants and individual franchise stores.

Ease:  The application is often less complicated and has fewer documentation requirements than those for traditional funding sources.

Speed:  Providers of merchant cash advances can make approval decisions quickly, often making working capital available in less than 14 working days. If the business is already using one of the funding provider's approved credit card processors that time can easily be reduced to 72 hours.

Flexibility:  Most traditional small business loans require a fixed payment every month, without regard to cash flow. A reputable merchant cash advance provider collects a fixed percentage of the receivables it has purchased only when the business processes credit card transactions. That means, it gets paid when the merchant gets paid. If sales are seasonally trending downward, so does the amount remitted, helping the business manage its cash flow without additional stress to the business.

Fees: Reputable merchant cash advance providers rarely impose charges like application or expedite fees. Because these companies receive a specified percentage of each credit card batch and not a fixed monthly payment, there are no prepayment penalties or late fees.

Facts to consider before utilizing this type of funding source:

Collection Period:  Your merchant cash advance provider will collect the receivables it purchased over a much shorter time period than most loans or leases, generally within one year. For some businesses, this shorter cycle is not feasible. Others prefer this time frame because it ensures that an outstanding obligation is handled quickly.

Use of Proceeds:  Most merchant cash advance providers are interested in providing capital to help their customers grow and enhance their businesses. They will emphasize in their underwriting a use of proceeds consistent with that goal. This funding should be used to help businesses manage unexpected expenses, take advantage of business development opportunities and strengthen their business, not sit in a "rainy day" fund.

Provider Reputation:  Because this funding is relatively specialized, using an established provider with a proven track record is important. Ask how many total customers they have served, the total dollar volume of funding provided, available funding capacity and how many businesses have taken advantage of multiple fundings.