Are merchant cash advances a good option for franchise working capital?

Q: Are merchant cash advances a good option for franchise working capital?

A Merchant Cash Advance (MCA) is a financing option where you get a lump sum in exchange for a percentage of your daily credit card or sales receipts until a fixed amount is repaid. They are very fast and easy to get (even with lower credit), and many restaurants and retail franchises have used them. However, they are one of the most expensive forms of capital – the equivalent APR can be extremely high. They also take a cut of sales daily, which can be painful for cash flow. MCAs might be a last resort if you can’t qualify for other loans and you have urgent needs. We usually recommend exploring alternatives (like short-term loans or lines of credit) before resorting to an MCA. If you do use an MCA, have a clear plan to get out of it and try not to re-borrow repeatedly.

A Merchant Cash Advance (MCA) is a financing option where you get a lump sum in exchange for a percentage of your daily credit card or sales receipts until a fixed amount is repaid. They are very fast and easy to get (even with lower credit), and many restaurants and retail franchises have used them. However, they are one of the most expensive forms of capital – the equivalent APR can be extremely high. They also take a cut of sales daily, which can be painful for cash flow. MCAs might be a last resort if you can’t qualify for other loans and you have urgent needs. We usually recommend exploring alternatives (like short-term loans or lines of credit) before resorting to an MCA. If you do use an MCA, have a clear plan to get out of it and try not to re-borrow repeatedly.