Question: How much does a merchant cash advance cost?
Answer: Different merchant cash advance providers charge different rates so it’s always important to not assume there is industry standard pricing. Company Capital looks at a couple of important factors when establishing a price range:
1. How much you’re looking for in relation to how much you qualify for.
A client who processes $50,000/month in credit and debit card sales but is only looking for a $10,000 advance would be considered lower risk because their capacity to repay the advance is that much higher, making the overall rate they qualify for lower. When a client takes everything they qualify for they run the risk of stretching themselves thin, raising the risk and rate along with it.
2. How much you can afford to pay back on a daily basis.
Not all merchant cash providers are the same but our rate model is flexible depending on what’s most important to the business owner. In the retail industry, credit and debit card sales typically represent between 85-95% of their total sales. That means having a lower daily payment, usually under 15% of their daily credit and debit card sales, is important. In contrast, a convenience store has such high cash sales that they can afford to pay as much as 30% of their daily credit and debit card sales because it represents such a low percentage of their total sales. I always like to ask my clients which is most important to them – the overall rate or a low daily payment and work backwards from there.
It’s always good to have options especially when it comes to your finances and a merchant cash advance!