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The economic slowdown is an arduous time for businesses looking for loans. However, anxious businesses can look at the new financing source on the block - merchant cash advance (MCA), also called a business cash advance. It is a novel avenue for business funding. MCA differs from customary loans as repayments are in the form of daily cut of credit card revenue. Businesses can apply for MCA if they have been in business for at least 9 to 12 months and have decent credit card revenue every month.

Procuring traditional loan is an uphill undertaking for small and medium sized companies as it involves drawn out application cycle, stringent approval standards, and low rate of approval. On the contrary, a merchant advance can be obtained with minimal paperwork and within a short approval period. MCA is a blessing for small businesses looking for instant financing to a maximum of $250,000.

Following are the top seven benefits of getting a merchant cash advance instead of a regular bank loan:

1. Faster application processing: The processing of MCA is finished in one week as opposed to the long waiting periods needed for conventional loans. Some providers sanction the advance within one day and transfer the money in 7 business days.

2. No interference in how the funds will be utilized: MCA providers are not concerned about the likely deployment of the advance. It is the business owner’s right to use it as she desires. The owner can make use of the funds for settling rent payment, catch up on tax payments, buy inventory, fund growth, etc. or even to settle some personal debts.

3. Trouble-free application process: The phrase “No pain, no gain” does not ring true for MCA. Financial institutions such as banks insist upon detailed business documents and ask various prying questions to get a grip on the the past, present, and future plans of your business before considering you for a loan. MCA providers are only interested in the monthly credit card sales receipts and the time in business. You should have been at least nine months in business and averaging at least $5,000 in monthly credit card receipts. Paperwork in the form of tax returns or account statements is not required. There are no upfront expenses or application fees - the bane of standard bank loans. Online approvals are also possible.

4. High approval rate: Poor FICO scores, bankruptcies, and below average credit history do not harm your chances of getting approved for MCA. Providers weigh your current business performance to verify your worthiness for MCA. For instance, a business averaging $50,000 in credit card receipts per month in the preceding year can get approved for almost $75,000. (Numbers may vary for different providers).

5. No collateral required as security: MCA providers cannot seize business or personal property if there is a business failure and the advance is not paid. This is a big positive for small sized businesses. No collateral or individual guarantees need to be staked. MCA is treated like a purchase of future revenue and not a loan.

6. Automatic deductions for repayments: Repayment of merchant cash advance is truly hassle-free. Either the business agrees to remit a certain proportion from its monthly credit card receipts or the credit card processor is directed to divert the repayment amount every month. This eliminates the need to mail payment checks, and possibility of paying penalties for delayed payments.

7. Repayments based on sales volume: The repayment amount changes every month based on the credit card sales receipts. When the going is good, repayment is more and if sale drops, repayments get adjusted accordingly to a smaller amount.

Merchant cash advance is a boon for small businesses without the wherewithal to avail loans from banks and other financial institutions. As banks get even more tight fisted, MCA is definitely a flexible and business-friendly financing option.