A short-term MCA loan can provide much-needed relief for cash flow problems. If you need financing for your business, you may wonder, “What are short-term MCA loans?”
Short-term MCA loans may make more sense compared to a traditional loan for your immediate needs. They are flexible, can vary in terms, and a short-term MCA loan offers faster repayment.
It’s a convenient way for you to access needed funds. A short-term MCA loan can help you fulfill temporary economic needs and take advantage of opportunities.
To learn more about short-term MCA loans, keep reading.
Cash Flow and How MCA Business Loans Can Help
Cash flow is a top concern for many business owners. Many companies have trouble collecting on their accounts receivable when it’s due.
Receivables are created after a company provides a service or good to a customer. The customer will typically not pay its invoice until the due date, or later. Until the customer makes a payment, this debt will remain categorized as an outstanding receivable.
Often, a business will try to encourage its customers to pay their invoices by sending out additional collection notices. The time that it takes to collect on invoices can prove problematic.
Unfortunately, some customers wait as long as possible to pay an outstanding invoice. As a result, business owners will often wait 60 days or more before receiving a payment. Meanwhile, the delay can cause severe cash flow problems.
Outstanding invoices affect more than business owners. They also affect employees.
Some businesses with outstanding invoices have problems making payroll. Many of them face the risk of having to pay employees later than planned. To avoid this kind of cash shortage, some business owners seek to increase their cash flow with short-term MCA business loans.
What are Short-Term MCA Loans?
A short-term MCA loan can prove beneficial for a business that needs a relatively small loan quickly. Even after careful planning, funds can fall short. When this happens, some business owners turn to short-term MCA loans to support their company.
Other business owners may try to pursue a long-term loan or line of credit from a bank. However, this isn’t always the best alternative. In many cases, a short-term MCA loan is more appropriate for meeting immediate needs.
When you’re experiencing a cash flow problem, it’s important to choose the right type of a financing for your business. There are several advantages to choosing a short-term MCA loan to resolve your cash flow problems. As you begin your research into this topic, you may wonder, what is considered a short-term MCA loan?
Not every business can qualify for a traditional bank loan. For example, some businesses haven’t been open long enough to qualify for a business line of credit. In this case, a short-term MCA loan is ideal for a new business with a high volume of invoices which can be used as collateral to secure the loan.
Short-term MCA loans are not a long-term financial solution. Businesses might access a short-term MCA loan for an amount that varies between $15,000 to $300,000. Usually, the term of the loan will range from 6 to 18 months.
How Can I Get a Merchant Cash Advance for my Small Business?
You might consider applying for a short-term MCA loan if you have a decent number of outstanding accounts receivable. Borrowing against your accounts receivable can help improve cash flow and is an invaluable tool that helps you keep up with your financial obligations. This practice enables companies to use their unpaid invoices to access funding.
Accounts receivable financing can help business owners circumvent the long application process of applying for a traditional loan from a bank. It gives business owners an access to funding based on their outstanding invoices.
With this kind of loan, a finance company will purchase the outstanding invoices from a business. The funding company will receive payment for the invoices directly from the businesses’ customers.
A lender that offers this type of financing typically charges its fees once the invoice it purchased has been paid. This kind of short-term loan can prove highly beneficial.
However, it’s important to stay away from other loan sources such as predatory payday lenders. This kind of company will offer short-term loans with large interest rates and fees. Typically, these lenders will establish payment dates multiple times a week.
They might also charge a fee of $15 for every hundred dollars borrowed. This arrangement will result in an interest rate of nearly 400%. Most businesses cannot afford to pay this kind of exorbitant fee.
Other predatory lenders provide loans of less than a thousand dollars. The terms that these companies offer enable them to make an unfair profit on excessive interest. If you need less than a thousand dollars, use a credit card.
Try a Merchant Cash Advance Lending Program for Your Business
For many, the process of applying for a traditional bank loan takes too long and it requires providing a significant amount of paperwork.
After you submit an application to a bank, you then have to wait to see if you have been approved. By the time the bank lets you know the status of your application, an opportunity that you wanted to take advantage of may have passed. Or maybe you were trying to avoid an emergency, but since the bank took too long to make their decision, the emergency is now occurring.
Gain Access to Short-Term MCA Loans for Your Small Business
Now you know the answer to the question, “What are short-term MCA loans?” What you need now is access to multiple MCA lenders so you can find the best deal.
Your FundingTree is your launching point for finding accounts receivable financing. On our website, you can fill out a free, straightforward online application to apply for funding. It’s a simple process that won’t affect your personal credit score.
After you submit the 90-second application, a financial advisor will review your information and then introduce you to lenders that offer short-term MCA loans. The process enables multiple MCA lenders to compete for your business. More importantly, however, it allows you to access the best rates and terms possible.
If you need fast financing for your business, you can apply for funding today. If you have questions, you can easily reach a Your FundingTree representative at 704-904-0774 or connect with us online.