For many startups, accessing working capital quickly is essential for growth and daily operations. Traditional financing options, such as bank loans, often require a lengthy approval process and strong credit history—something that many new businesses may not have yet. This brings us to an important question: can startups apply for a no credit merchant cash advance (MCA)? The short answer is yes, but there are some critical details to understand before pursuing this funding option. To qualify for MCA for startups, you must have at least $15,000 minimum sales in the last 3-6 months. That’s the minimum requirements for startup to apply for a merchant cash advance. Pre-revenue startup will not qualify for merchant cash advance. Merchant cash advance is a revenue purchase so if there’s no revenue there is no future revenue to purchase or advance.
What Is a Merchant Cash Advance?
A merchant cash advance for startups is a financing product that provides businesses with a lump sum of cash upfront in exchange for a percentage of their future credit and debit card sales. Unlike a traditional loan, MCAs do not require collateral or a strong credit score, making them appealing for startups that may not qualify for conventional credit lines.
MCAs are repaid through automatic daily or weekly deductions from the business’s card sales, which means repayment adjusts based on revenue fluctuations—helping startups better manage cash flow during slower periods.
Are Startups Eligible for a Merchant Cash Advance?
Startups can apply for a merchant cash advance, but eligibility criteria can vary depending on the MCA provider. Typically, lenders look at:
- Business Age: Many MCA companies require at least six months to one year of business operation to ensure there is a track record of card sales.
- Monthly Revenue: Lenders generally ask for a minimum monthly revenue to ensure the business generates enough sales to repay the advance. This minimum can vary widely but often starts around $5,000 to $10,000.
- Credit Card Sales: Since repayment is tied to credit and debit card transactions, your startup should process most of its sales through these methods.
Startups that meet these basic requirements may find MCAs an accessible alternative financing solution. However, it’s essential to consider the cost and terms carefully.
Advantages of MCAs for Startups
- Fast Funding: MCAs offer quick access to capital, often within a few days, helping startups seize growth opportunities or manage unexpected expenses.
- Flexible Repayments: Payments are tied to your daily sales, so if business slows, repayments adjust accordingly, easing financial pressure.
- Minimal Credit Requirements: MCA providers focus more on sales performance than credit scores, which benefits startups with limited credit history.
Considerations Before Applying
While MCAs can provide fast and flexible funding, they tend to come with higher costs compared to traditional loans. Factor rates are often higher, which means the total repayment amount can exceed the initial advance significantly. Startups should review terms carefully and assess the impact on cash flow before proceeding.
Also, be sure to verify the reputation and transparency of the MCA provider. Working with a trusted financial partner like Liberty Capital Group can ensure you receive clear, fair terms and expert guidance tailored to your startup’s needs.
How Liberty Capital Group Can Help Startups Secure a Merchant Cash Advance
At Liberty Capital Group, we specialize in providing flexible financing solutions to startups and small businesses, including merchant cash advances. Our team works closely to understand your unique needs and match you with the best funding options available, ensuring a smooth, transparent application process.
Learn more about how we can support your business growth by exploring our merchant cash advance services.
Additional Resources
For a deeper dive into MCAs, their costs, and benefits for startups, the Small Business Administration offers valuable insights on alternative funding options: SBA Guide to Alternative Small Business Lending.
Conclusion
Startups can indeed apply for merchant cash advances, provided they meet certain requirements around business age, revenue, and card sales. MCAs offer a fast, flexible funding source ideal for businesses needing quick access to capital while managing variable income. However, due diligence is essential to ensure you choose the right provider and understand the repayment terms fully.
If your startup is exploring financing options, consider contacting Liberty Capital Group to discuss how a merchant cash advance or other financing solutions could support your growth.