Merchant cash advances (MCAs) provide quick cash for business owners facing financial difficulties. While the prospect of quick cash deposited into your business account may seem like a good idea in the moment, it’s important to remember that MCAs often lead to a vicious cycle of borrowing and can put you in a deeper financial hole.
Get informed on the pros and cons of an MCA to learn whether it’s right for your business.
Should I Get an MCA?
There is no doubt that a quick influx of cash can be beneficial to any business owner. In addition to helping out business owners in a time of need, MCAs have the following benefits:
Quick approval process. Once you’re approved for an MCA, the funds are deposited quickly into your business account.
Some lenders do not require collateral. Most MCAs are unsecured loans, which means that instead of pledging assets, you qualify based on your credit history and income. However, this means that the lender may restrain your bank account upon loan default.
The amount of sales equates to the amount of payment. Your payback amounts will vary depending on your business’s credit card sales.
Overall, the major benefit of an MCA is the quick deposit of cash into your bank account. However, it’s important to remember that this benefit comes with strings attached, including the following:
Not federally regulated
High-interest rates that increase with higher business sales
A tendency to lead to another MCA in the future, creating a vicious cycle of borrowing
If your business is struggling with debt caused by MCAs, our MCA defense attorney Robert “Bob” Jacovetti is here to help. Bob has dedicated his career to protecting debtors’ rights, and he’s prepared to assist you, too.
Contact Jacovetti Law, P.C. at (516) 217-4488 for a free consultation.