Merchant Cash Advance Definition

By Phillip Parker

Last Updated: October 7, 2013

Merchant Cash Advance Explained:

What is a Merchant Cash Advance? A Merchant Cash Advance is a financing option for small businesses in which a merchant account provider pays a one-time lump sum to a merchant in exchange for a percentage of future credit card sales. This percentage of sales is collected by the credit card processor until the initial amount plus interest is repaid in full. Because a Merchant Cash Advance is technically classified as a sale of a portion of future sales rather than a conventional loan, it is not subject to interest rate regulation. As a result, the interest paid on a Merchant Cash Advance can be much higher than the interest typically paid on a small business loan.

Merchant Cash Advances are generally marketed to business owners who are unable to secure traditional small business loans due to poor individual credit histories. They allow a merchant to obtain access to cash much more quickly than a traditional loan, and their repayment method allows for some flexibility over time. Merchant Cash Advance payments are typically withheld seamlessly by the credit card processor, much like normal credit card processing fees.

Merchant Cash Advance Video Explanation

Use of this video does not constitute an endorsement of any kind by CardPaymentOptions.com.

About The Author

Phillip Parker

Phillip Parker is an independent card payment expert specializing U.S. and Canadian point-of-sale, e-commerce, and mobile payment acceptance. He has nearly two decades of experience in credit card processing as a journalist and consultant. Phillip is the creator of this website and has written over 1,500 articles covering numerous payment acceptance topics. He has also published critical reviews about most merchant services providers currently in operation.

Expert Guidance

Phillip has consulted businesses of all sizes from mom-and-pop shops processing $10K per month to enterprise level organizations processing in excess of $300MM annually. His specialties include:

– Merchant Account Statement Auditing

– Rate & Fee Negotiation

– Processor & POS Selection

– Software Integrations

– Risk Assessment

– Fraud Prevention

– General Processing Advice

Schedule a Consultation Here

Phillip’s Top Picks

Phillip has researched and reviewed over 1,000 merchant services providers over the last 15 years. He also owns multiple businesses that accept credit card payments. If you are looking for an ethical credit card processor that doesn’t hide fees or lock you into expensive contracts, see Phillip’s merchant account picks here.

In The Media

In addition his contributions on CPO, Phillip has also been quoted in several major publications such as The Los Angeles Times, INC Magazine, Miami Herald, Computer World, and numerous others. If you would like to interview Phillip for your story or podcast, please reach out here.

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1 Responses

Suzanne grube

December 10, 2019 8:12 pm

I’m trying to get a loan but dealing with sales people is horrible I had Gina at clover reach out to me about loan she said pay monies and I’m good call your sales person that was 2.5 weeks ago I call her today and another stupid story I’ve been doing what everyone said I have changed banks , and new building for my business moved in new town is there anyone out there that believes in team spirit help someone who is a true small business understand er !!!!!

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