Member Article

What is the Difference Between a Loan and a Merchant Cash Advance?

Businesses often face the need for additional funding to support growth, cover unforeseen expenses, or seize new opportunities. While traditional bank loans remain a popular option, merchant cash advances (MCAs) have gained traction as an alternative funding source.

What is a merchant cash advance (MCA)?

A Merchant cash advance is a non-traditional financing method that provides businesses with immediate access to working capital in exchange for a percentage of their future sales. Unlike traditional loans, MCAs are not based on a fixed principal and interest rate. Instead, the repayment amount is determined as a percentage of your daily or weekly sales volume.

How does an MCA work?

When you apply for an MCA, the financing provider assesses your business’s sales history and creditworthiness. Upon approval, you receive an upfront funding amount, which is typically 80%–90% of your average monthly sales volume. You then repay the advance plus a service fee, typically collected daily or weekly, through a deduction from your credit and debit card receipts.

Merchant cash advance vs. loan: key differences

• Funding speed: MCAs typically provide faster access to funding compared to traditional loans, as the approval process is often shorter and more straightforward.
• Eligibility: Businesses with a limited credit history or fluctuating cash flow may still qualify for MCAs, as the financing provider focuses primarily on your sales volume.
• Repayment structure: MCAs have a non-recourse structure, meaning you’re not personally liable for repayment if your customers default.
• Interest rates and fees: MCAs typically have higher interest rates and fees compared to traditional loans, primarily due to the daily or weekly repayment structure.

How a merchant cash advance from Rosewood Finance can help

Rosewood Finance is a leading provider of commercial finance products, such as merchant cash advances, they offer solutions tailored to the specific needs of businesses of all sizes. Their expertise and experience make them a trusted partner for businesses seeking alternative funding solutions.

Benefits of an MCA from Rosewood Finance:

• Quick funding: Access upfront cash within a few days, enabling you to meet urgent financial needs promptly.
• Improved cash flow: Enhance your working capital management, enabling you to expand operations and pursue growth opportunities.
• No personal liability: Enjoy non-recourse financing, safeguarding your personal assets in case of customer defaults.
• Flexible term options: Choose from various term lengths to suit your business’s cash flow cycle and growth objectives.

How Rosewood Finance can support your business:

• Comprehensive assessment: Rosewood Finance thoroughly evaluates your business’s financial performance and sales history to determine the most suitable MCA arrangement.
• Transparent pricing: Rosewood Finance provides transparent pricing, clearly outlining the fees and interest rates associated with your MCA, ensuring informed decision-making.
• Dedicated support: Rosewood Finance offers ongoing support to guide you through the MCA process and address any questions or concerns.

If you’re seeking alternative funding to fuel your business’s growth, consider exploring an MCA from Rosewood Finance. Their flexible solutions, quick funding, and transparent approach can help you achieve your business goals with confidence.

This was posted in Bdaily's Members' News section by iCONQUER Ltd .