Determine the total cost of your advance.
Getting preapproved has never been easier.
How much do you need?
Estimated Factor Rate
See if you qualify for a merchant cash advance
New York Tribeca Group helps your business success by you on the cutting edge of business financing opporties today. We value the overall health of your business and bring options that are not readily available in the traditional financing market.
Time in Business
We evaluate how long you’ve been in business and repayment history.
We look at your annual revenue and review your daily balances.
Don’t worry, your credit score or defaults won’t be the deciding factor
What is a merchant cash advance?
MCAs provide small businesses with working funds backed up by future bank and credit card deposits. Unlike a typical loan, an MCA will give you a lump sum of money in exchange for future sales.
What Is an ACH merchant cash advance?
Instead of reviewing an applicant’s credit card processing statements to decide whether or not to fund, and how much, an ACH MCA lender will review the small business’s deposit and cash flow statements to calculate the advance amount.
The advance is then repaid through daily or weekly debits from the business’s bank account, known as Automated Clearing House (ACH) withdrawals. These remittances are fixed and occur over a set term, usually ranging from 3 to 18 months.
Because ACH advances are based on a business’s overall sales, its applicable to all small business owners — not just those with high credit and debit card sales.
Now that we’ve defined merchant cash advance and its variations, let’s examine its fee structure.
Merchant cash advance fee structure
In order to determine the fees for an MCA, a factor rate is applied to the equation. Many business owners are unfamiliar with what exactly factor rates are and how they are calculated. It’s broken down like so:
- Factor rates are formatted into decimals ranging from 1.10 to 1.30.
- These rates calculate the MCA fee which is a small percentage of the original amount from the advance.
- The remainder of the finance cost will be the same whether the advance is paid off in advance in three months or six months. The remaining finance cost of the MCA financing remains the same, whether you pay off an advance in 3 months or 6.
Adding up MCA factor fees
If you receive a $30,000 cash advance with a 1.30 factor rate, you multiply the advance by the rate.
$30,000 x 1.30 = $39,000
You would pay $39,000 0 to the MCA provider for borrowing $30,000. The advance cost would be $9,000.
How lenders determine MCA factor rates
Many business owners fear that their credit score will be the make it or break it factor when applying for financial aid. Lenders look at more than a credit score when making the decision. When determining advance amounts and rates, projected sales is the major key. What’s most important in MCA financing is projected sales. As a result, expect lenders to complete a full examination of your business’s credit, debit, and cash flow statements.
In addition, a lender will consider:
- Credit history
- Length of time
- Sales and growth
It’s easy as one, two, three: How to use the MCA calculator
Now that we’ve provided background for the MCA online calculator, here’s how to get the most out of the tool. (Before you get started, it’s important to note that this calculator is for ACH transactions only)
Calculate your desired amount and enter it into the MCA calculator.
Next, figure out the estimated factoring rate and enter it. These rates range anywhere from 1.10 to 1.30.
Then, decide on how long you would like your estimated term to be. The average repayment time frame for a merchant cash advance is approximately nine months. But your term can fall between three months to 24 months.
The calculator will factor in all the numbers provided and give you a total sum for your payment. You can see the difference between daily and weekly frequency.
Whether you have set numbers or are unsure of where to begin, we recommend you try out different scenarios with factor rates, terms and advance amounts. This can help you determine what you can and can’t afford: solidifying the right plan for you.
When to consider a merchant cash advance
Sometimes you may just need a quick loan to cover the rent or payroll. In this case, a merchant cash advance may be the best idea as a financing option for short-term cash issues . An MCA can also be beneficial for purchasing of new equipment, manufacturing needs, and any additional business expenses.
Take a look at your business plan before settling with a merchant cash advance. Ask yourself:
- Are my sales projections good?
- Can I afford it with my cash flow?
- Can I meet my payments on time?
Overall, you want to make sure you can fulfill other financial obligations while being able to afford running your business.
How to qualify for a merchant cash advance
Before diving into it something you may be unfamiliar with, it’s best you get aquatinted with some of the terms. In addition to learning the breakdown of an MCA, certain numbers, and their structure.
Things to consider before you begin
Opening a small business comes with a plethora of responsibilities. Many business owners will start launching by taking out a loan. The most common problem with this is the fact that people don’t think about how to consolidate debt before finding themselves stuck in over extended loans.
If you plan to take out an MCA, our calculator can help break things down for you. This tool will provide you with an accurate estimate of your total advance and repayment plan. You plug in the numbers, we give you results. It’s as simple as that!
How to qualify for a merchant cash advance
Accessing funding for your business is now easier than ever. With online technology, funders can now easily underwrite a business with minimal paperwork and documentation required.
Here’s what you’ll need to qualify:
- 3+ months in business
- $110K+ annual revenue
- 550+ credit score
Got some questions?
With an MCA, it’s not an actual loan but a cash advance based on the credit card sales deposited into a business’ merchant account.
Applying for one is rather simple. Once approved, you access your funds within 24 hours.
Once you receive credit card sales, you can apply for an MCA. You’ll need to provide bank statements from your business and credit card statements as well.
You’ll obtain your advance which is usually directed into your account. After that you’re set to go. Automatic repayments will occur so be sure the money is in the account when the time comes.
In some cases, yes, debt isn’t always a bad thing. In larger projects, debt is used for growth. Taking it on and paying it off, debt is needed to help build your credit score which allows you to get better interest rates on any loans you take out.
Fast payments and easy qualifications are popular reasons for why many business owners choose MCA’s as their kind of financing.
Make sure to consider that they do come with high fees and lack of business control as well.
The cost of an MCA depends on the length of your advance and the factor rate on it.
The price will be discussed when coming to the term agreements.
All it takes is 5 minutes of your time. Fill out our online application or give us a call and speak to one of our representatives who can help guide you through it.
Credit score, length in business, and monthly revenue are all factors considered when deciding your application status.
Meeting minimal requirements still gives you a likely chance.
Take an overall look at your business and ask yourself: is it in good standing? Most lenders want to provide you with the best options possible. In order to do that, they take a look at the health of your business.
A good credit score is important but it is not the major key to making or breaking your approval rate for a line of credit.
A helpful tip: be sure to make your minimum payments on time. Try and pay more than the minimum when possible to help pay off your loan sooner and keep your account in good standing.