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Clear MCA advances cash to qualified small businesses that some refer to as MCA loans, but the transactions are actually receivables purchases and not loans. ClearMCA has a funding program where it funds merchant cash advances otherwise known as MCAs throughout the industry and what these involve are purchases of receivables; while these advances are called MCAs for short, they are not loans. This is how merchant cash advance companies can provide funds to small businesses who need those funds in a very quick way so that the small businesses do not need to go through elaborate qualification details and an elaborate application process that takes weeks and weeks or months and months or even longer. What’s good about MCAs is that they are typically available very quickly for approved small businesses. This means that the financing process can take 24 hours or as little as 24 hours for qualified small businesses. Not everybody is approved, and not every small business is approved. It depends on the number of factors, including but not limited to daily bank balances or average daily bank balances, the amount of deposits in a month or per month.
It also depends on the amount of the deposit, and the monthly revenues of the small business that is applying for funding. it also depends on the industry, some Industries are more risky than others, and some Industries just do not qualify all together. So if you’re looking for MCA loans they are more appropriately characterized as a merchant cash advance or a receivables purchase.
There are three things that a small business that is looking for a small business financing should be on the lookout for. These are typical tricks that brokers play on small businesses who are looking for financing. These brokers are bad actors in the industry and they typically are known to come after small businesses who are in dire need of cash and there are three scams that you should look out for. One of the scams is known as SBA bait which is what we call it here at mca. SBA Bay involves a broker telling you that okay look if you take out this cash advance now with me in 45 to 60 days you will qualify for a million dollar SBA loan. This is absolutely untrue and it dupes a lot of small businesses who are in need of cash. and instead of getting the financing down the road, they are stuck with this financing that is very expensive for them.
The second scam or bait and switch that the broker plays with the merchant is that they say okay if you take out a $10,000 cash advance with me today, and then hit payback,000 tomorrow, you will qualify for $300,000 worth of financing. This is just an example, there are many variations of this program. It’s disappointing to the small business because the small business looks for MCA loans and instead gets put into financial distress.
sometimes, this one involves much higher dollar amounts let’s say $50,000 and then the next day or the next week the merchant pays back $85,000. so in one week this means that the broker or the funding company is going to make $35,000 and then after that the broker disappears and nobody can contact the broker and the business is out $35,000, and doesn’t have access to the other level of promised financing. This is very bad and it really has to stop. Another one which is very common is that there is a play that some Brokers make where they say listen I’ve got you qualified for $458,000 in financing I can get you the money today. This is very interesting because how can a broker or anybody make that offer without having reviewed your financials, the small businesses financials, or done any underwriting or diligence, or not even knowing what the industry is, or what the business is, for that matter. It is shocking that people can get away with this. MCAs are often confused with MCA loans and these are not loans because they first involve a receivables purchase and then a receivables repurchase.
One of the best things that a small business can use a merchant cash advance for is to be generating revenue. When this happens a small business often looks for MCA loans but it’s really a purchase of receivables and not a traditional loan. it is one thing to pay past debts and debts that are overdue, and it is a very different thing to use a merchant cash advance to generate revenue. This is very important because if a merchant cash advance is used to pay off that’s a liabilities, and there is no focus on generic generating revenue, it just slows the inevitable, which is that the business is going to fail or is very likely to fail because it doesn’t have sustainable cash flow. and since cash flow is the life of blood of a business in the lifeline of a business is very important that a business has cash flow in order to survive, thrive, and reduces leverage by paying down the merchant cash advance or repurchasing its receivables, so that it can get underway with its operations. and this would include servicing its customers and clients so that it can be a and paying its employees so that it can be a productive business. to apply to see if your business qualifies for a merchant cash advance from ClearMCA, fill out the form on our website, we will be happy to speak with you if your business qualifies. Remember, in order to apply, the small business must provide the last 4 months of its business bank statements as part of the application process.
One of the ways that the small business can use an MCA to generate revenue is demonstrated by this example. This example is one of the best ones because it shows how a small business can use an MCA to generate revenue. The way to generate revenue for the small business is to buy at one price and sell at a higher price. The best example is that if you have a $20 bill that you can purchase for anything less than $20 it is a when and it would generate cash flow as long as the businesses expenses do not equal or exceed those $20 because of equals or exceeds this $20 then it is at its Breakeven point. and once it’s at it’s breakeven point it doesn’t it’s not at a cash flow point in the small business needs to be a cash flow point for this to make any sense at all. A lot of people call these MCA loans, even though these are receivables purchases, so they are not technically loans.