How Merchant Cash Advances Differ From Small Business Loans

Merchant cash advances are classified as commercial transactions, not loans. Here are the distinguishing characteristics of merchant cash advances:

No Fixed Terms. Providers estimate the term for repayment based on the business’ sales history. The customer is charged a set fee, referred to as a factor rate and there are no interest charges.

Cash Advances Are Unsecured. The provider does not receive any collateral or guarantees, accepting all risk of the client going out of business.

Minimal Documentation. Often, a client can simply provide six months of processing statements, two months of bank statements, a copy of a mortgage statement or property lease, and a driver’s license.

No Fees. There are no late fees or penalties attached to the product.

Fast Approval and Funding. Most cash advance providers can approve and fund an application in 2-7 days, LVRG can get you funded in less than 1.

Daily Repayment. This varies according to the volume of the merchant, and changes according to the business cycle. The provider receives a set percentage or amount of the merchant’s daily card settlement batch.

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