What is an MCA?
MCA is known in the business community is a merchant cash advance business loan. The most common business loan today that applicants request financial solutions for typically have a daily or weekly payment, amortized over less than a year and are unsecured. Easy to apply to get but not so easy to afford as it typically causes payment fatigue.
Who provides MCA capital?
Since the recession of 2008-2010, the number of providers of short-term working capital loans has grown from about a dozen market and technology setting lenders to several hundred shops of all sizes pitching an assortment of "different" options.
In truth most of MCA community is selling the same short working capital option based on a number of factors:
1. The business annual revenue
2. The number of deposits or credit card transactions
3. Personal credit of the ownership
4. How much your willing to pay over a short-term, often borrowing 50,000 can cost a borrower anywhere from $62,000 to
$73,000 based on the factors above.
Are MCA loans good for my business?
In truth the product itself can be very advantageous to a borrower for a number of reasons, most commonly is that it is quick and readily available for just about every credit score out there. The problem for borrowers is once they start borrowing these types of funds they have to keep renewing just to stay afloat cash flow wise.
When is an MCA or Short Term Loan good for your business?
The one question we like to answer is to have the applicant explain the use of funds but specifically give them an example of what we have seen help and hurt a client.
Example A: You borrow $75,000.00 to fund a job or project that is going to pay you're a gross of $350,000. After you subtract the $75,000 + $9000 after early payoff in borrowing cost you net $266,000! Great, if you don't qualify for the LOC or Term loan this always makes great sense. Just the cost of doing business.
Example B: You borrow $75,000.00 to replenish your cash flow for general every day use and over the next 9 to 12 months you pay the full amount of $93,750 with no real revenue-generating purpose. Unless it's purely a bridge type funding while your recover or get paid by delinquent A/R this is not a smart move on your part.
At Greenlight we have expanded our direct lending options and created a network of lenders, banks and credit unions that are ready to offer you a better rate, better terms, and more conventional loan options!
All you need to be is open minded and organized......let your solution be provided by an experienced account manager at Greenlight Business Credit.
What we offer:
3-5 Year Term Loans
Zero Net Refinance
SBA Term Loans
Real Estate Options
Asset Based Options
Cash Out Refinancing