Still Curious About a Merchant Cash Advance? The Last Article You Will Ever Need to Read

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You’ve seen the advertisements, received calls with offers for it, researched it online, but you’re still not sure about Merchant Cash Advance(MCA). Every business needs capital but bank loans just aren’t available. Alternative funding sources are out there and they spend millions of dollars every year trying to reach you. The word “alternative” usually causes business owners to put their guard up. Basically, all non-bank loans warrant skepticisim until proven innocent. We here at the Merchant Cash Advance Resource understand your concerns and would like to answer your questions once and for all. We are not a funding source, reseller, or advertiser and thus maintain an independent perspective on the the MCA industry.

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  • How Legitimate is it?
  • Who is Really Using it?
  • How Big is the Industry?
  • How Widespread is it?
  • What is the Application and Underwriting Process?
  • Who are the Most Well Known Providers of it?
  • Who is Regulating it?
  • What Happens if you Default on it?
  • How does it Compare to an SBA Loans?

How Legitimate is a Merchant Cash Advance?

The purchase of future credit card sales(Merchant Cash Advance or MCA) has been mainstream since 1998. At that time, Kennesaw, Georgia based funding source AdvanceMe, held the patent rights to a process known as split funding. The patent was later invalidated and AdvanceMe was immediately joined by industry veterans AmeriMerchant, First Funds (now Principis Capital), Merchant Cash and Capital, Business Financial Services, and Strategic Funding. All of these firms have been operating since before 2006. As of 2011, there are now nearly 40 documented direct providers of capital.

MCA funding providers are backed by big name hedge funds, a few at one point by well known investment bank, Goldman Sachs. MCAs have frequently popped up in the news and are openly endorsed by some of the largest payment networks in the world. See for yourself:

Feb. 11, 2011 – 10 Reasons to Start a Business This Year

Sept 1, 2009 – Enterpreneurs Turn to Alternative Finance

Apr. 2009 – Merchant Cash Advance Financing: The Good, The Bad, and The Ugly

Brochure and advertisement directly From First Data, the largest merchant acquirer in the world.

Advertisment and endorsement directly from Chase Paymentech

Program is offered by NAB, one of the nation’s largest credit card processors and the 2008 Detroit Regional winner of Ernst & Young Entrepreneur of the Year Award.

Program is offered by Evo, one of the nation’s largest credit card processors and winner of the 2009 New York Metro Entrepreneur of the Year Award.

Who is Really Using a Merchant Cash Advance?

Nearly every major national retail or restaurant franchise has used a Merchant Cash Advance.  A small sample of the names include the following:

  • Burger King
  • Domino’s Pizza
  • Hooters
  • Subway
  • Dunkin Donuts
  • Taco Bell
  • Denny’s
  • Wendy’s
  • Meineke Car Care
  • Maaco
  • Aamco Transmissions
  • Curves Fitness

Data was obtained directly from Secretary of State UCC-1 filing records. More information on franchise funding can be read in one of our previous articles, “Who is Really Getting a $250,000 Merchant Cash Advance?

How Big is the Industry?

Experts have predicted that more than $1 Billion in MCAs are being provided to businesses every year. We conducted independent research and was able to validate the size to be greater than at least $500 Million in 2010. Check out the study at, “Complete Merchant Cash Advance Statistics 2010

How Widespread is Merchant Cash Advance?

The MCA product is not limited to the United States. This product is actively growing in:

  • Canada
  • United Kingdom
  • Australia
  • Hong Kong
  • Singapore

For a list of international funding providers, take a peek at our article at, “Merchant Cash Advance – Canada, UK, and Beyond!

What is the Application and Underwriting Process Like?

EASY! We recently released a guide for merchants that breaks the process down step by step. Download the guide here.

Who Are the Most Well Known Direct Providers of Merchant Cash Advance?

The biggest names are compiled in our Funding Directory. Many are BBB accredited and a few are Ernst & Young Entrepreneur of the Year award winners.

Who is Regulating the Merchant Cash Advance Industry?

Since MCAs are a purchase/sale of future credit/debit card receivables, lending laws do not apply. However, most firms belong to a self-regulating body known as the North American Merchant Advance Association. As stated on their website, NAMAA’s purpose is to promote competition and efficiency throughout the industry by:

  • Providing education and professional development to its members
  • Developing ethical standards and best practices guidelines for the industry
  • Evaluating and providing education regarding the development and enforcement of intellectual property rights that affect the industry
  • Evaluating and developing improvements to existing business methods and practices
  • Developing industry relevant products and services
  • Engaging in regulatory and legislative advocacy

What Happens if You Default on a Merchant Cash Advance?

In the case of a legitimate business failure, the merchant’s assets tend to be protected. There is significantly less at stake than a bank loan. We covered this topic once before in an article here, “What Happens When you Default on a Merchant Cash Advance?

How Do Merchant Cash Advances Compare to SBA Loans?

The Small Business Administration protects banks from defaults for up to 90% of the losses. Despite this wildly generous guarantee, SBA Loans are considered to rank lower than a MCA. How is this is possible and what specific proof is there? Check out our analysis in, “SBA Loan vs. Merchant Cash Advance.


The Merchant Cash Advance financial product has been in existence for more than a decade and is legitimate, mainstream, endorsed by reputable names, has been used by the most popular franchises in the U.S., is easy to obtain, offers asset protection that loans cannot, is self regulated, and is in many ways BETTER than a loan guaranteed by the SBA. A MCA may not be right for every business, but if it was just uncertainty that was holding you back, fear no more. This thing is for real…

-The Merchant Cash Advance Resource

Last modified: December 15, 2011
Sean Murray

Category: merchant cash advance, MPR Authored

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