Merchant Cash Advance

A merchant cash advance provides funding in exchange for an agreed amount of future business receivables. It differs from a conventional installment loan. The written agreement determines how collections are calculated and how the provider receives funds. The FTC describes this structure in its small-business financing report. [1]

Before accepting an offer, ask what happens when sales fall, how any reconciliation or adjustment process works, and which events trigger default. A description such as “sales-based” is not enough to understand your obligations.

An MCA may be worth discussing when an established business needs working capital and can support the proposed remittances. Possible uses include a stock purchase, a seasonal expense, or an operating cash gap. Start with a specific purpose and the expected source of cash that will cover the obligation.

For example, a retailer considering extra inventory should compare the purchase date with the expected sales period. Forecast slower sales as well as the expected case. New funding should not depend on every sale arriving exactly as planned.

Ask for the amount you will actually receive after deductions, the total amount to be collected, every fee, and the collection frequency. A factor rate is a multiplier, not an annual interest rate. Comparing a factor rate directly with a loan’s APR can be misleading.

A hypothetical $20,000 advance at a 1.30 factor results in $26,000 before any additional fees. This is an arithmetic example, not a GoodToGo Capital offer or an APR calculation. The time required to collect that amount materially affects the annualized cost. Ask the provider for the applicable disclosures and a written explanation of early completion terms.

Have recent business bank statements, your business and ownership details, the funding purpose, and a list of current financing obligations available. Our application requests four months of business bank statements. Additional information and underwriting requirements can vary by provider and product.

The amount and terms offered depend on your business, receivables, credit profile, existing obligations, and the provider’s review. Starting an application does not guarantee approval. We can help you discuss the documents and questions relevant to your request.