A merchant cash advance is not a loan: it is a sales contract whereby the funding source agrees to purchase a future volume of the business' sales at a discounted amount. Repayment is debited directly from the business' checking or merchant processing account in small daily or weekly amounts until the purchased sum has been repaid.
The amount of those payments can be based on either an agreed upon percentage of the business' sales or a fixed daily or weekly dollar amount—whatever best suits the circumstances of the particular borrower. Either way, large, burdensome monthly payments are eliminated. And, when the payment amount is based on your sales, you'll never have to pay more than what you can afford! When sales are down, so is the payment!
Every transaction is different, of course, but most merchant cash advances are designed to be repaid within 6-18 months. However, in cases where the payment amount is based on a percentage of sales, regardless of how long it takes to complete repayment, the borrowing business will generally never have to pay any more than the amount originally agreed upon.
Another great feature of cash advances is that the personal credit of the business owner is typically not a deciding factor. What's most important with this type of financing is the deposit volume, average bank account balances and infrequent overdrafts or returned items. Simply put, if a business has consistent cash flow it will almost always qualify for a merchant cash advance, even if the owner has poor personal credit.