How Merchant Cash Advance works
A merchant cash advance is a commercial transaction in which a provider purchases an agreed portion of a business's future receivables. It is generally structured as a receivables purchase rather than a traditional loan.
Repayment is commonly made through daily or weekly remittances. Depending on the agreement, remittances may be fixed or may adjust to verified revenue. Excel Capital Funding can present an eligible business to independent providers and help the owner compare available proposals.
May be a fit for
- Businesses with consistent card sales or bank deposits
- Owners who need short-term capital for a defined business purpose
- Businesses that may not fit conventional bank underwriting
- Time-sensitive expenses that can support near-term revenue
What providers evaluate
- Operating history and business location
- Recent and recurring revenue or receivables
- Average monthly deposits and deposit frequency
- Existing financing obligations and overall cash flow
Common documents
- Completed business application
- Recent business bank statements
- Government-issued identification for owners
- Voided business check and formation records when requested
- Processing statements or other revenue records when applicable
Common business uses
- Inventory purchases
- Payroll timing gaps
- Marketing campaigns
- Repairs or urgent operating expenses
Required documents and permitted uses vary by provider, product, industry, and transaction. Additional information may be requested.
Evaluation process
- Submit basic business information and recent financial documents.
- Excel Capital Funding reviews the file for completeness and may refer it to suitable independent providers.
- The business reviews any provider proposal, including the purchased amount, purchase price, remittance method, reconciliation rights, fees, and default terms.
- If the business accepts and the provider completes its verification, the provider determines whether and when to fund.
Points to consider
- A merchant cash advance can carry a higher total cost than conventional financing.
- Frequent remittances may reduce daily operating cash, so the business should model cash flow before accepting.
- Factor rates are not the same as annual percentage rates. Compare total dollars remitted, estimated duration, fees, prepayment terms, and reconciliation provisions.
- Availability and contract terms depend on the provider and applicable law.
Frequently asked questions
Is a merchant cash advance a business loan?
It is generally structured as a purchase of future receivables rather than a loan. The governing agreement determines the parties' rights and obligations.
How are remittances collected?
Providers may use ACH debits, a split of card receivables, or another method described in the agreement. Frequency and reconciliation procedures vary by provider.
What should I compare between proposals?
Compare the amount delivered, total amount to be remitted, estimated term, payment frequency, all fees, reconciliation rights, prepayment treatment, and default provisions.
Excel Capital Funding LLC acts solely as a commercial financing broker and referral source and is not a direct lender. Products are offered by independent providers and are subject to their underwriting, approval, documentation, and availability. Excel Capital Funding does not offer, broker, or arrange financing for businesses located in California.