Merchant Cash Advance Programs: Everything You Need to Know

Your independent sales organization usually focuses on payment processing services for your clients. When you have newer businesses signing up with you, they often need access to funding as they get up and running. This is where merchant cash advances can help. Working with a cash advance provider helps your clients gain access to money when they need it. It also gives you an additional revenue opportunity along the way.

What Is a Merchant Cash Advance?

A merchant cash advance is a form of funding that generally works more quickly than a traditional loan. Instead of focusing on traditional credit factors, it relies on a record of incoming receipts. Repayment comes through a percentage of sales until the merchant cash advance is repaid, so lenders are able to collect repayment through the regular course of your clients' business. The fees and interest rates tend to be higher than they are with a traditional loan, but when a business has an immediate need, the flexibility that this product provides can create a tremendous boon.

Benefits for Your Merchants

The primary benefits of this product for your merchant clients are speed and ease of use. True emergencies happen every day to businesses everywhere. Equipment may fail, or something may break that puts their ability to function in danger until they can get it fixed. In this situation, in the absence of high enough revolving credit lines or cash in reserve, your client must rely on traditional lending. By the time that process finishes, a week of revenue may be lost, making a financial strain even more difficult.

Similarly, even after the loan is in place, your client has to pay it back on a regular schedule. With the loss of revenue already creating problems, this can be hard to meet. The cash advance, on the other hand, gives fast money and a repayment mechanism that just comes as a portion of the revenue the business grows. This is far simpler and connected directly to income, often resulting in an easier repayment.

Benefits for You

As an ISO, partnering with a merchant cash advance provider has its own benefits. Part of this is simply another service for your client. You provide a direct lifeline to businesses that need it, enhancing your customer service that you can deliver for your merchant accounts.

In addition, this partnership delivers revenue directly to your bottom line. Your contract with the merchant cash advance provider will include residual fees that you gain as part of the repayment from your client. You both collect those residuals as a percentage of your clients' revenue and as a percentage of that repayment. The result is a healthy boost to your own income over time.

A merchant cash advance is not right for every client or situation. When you can offer it, though, it helps your merchants out of tough spots while accelerating your own growth. Partner with cash advance providers and watch your earnings soar.

Discover Nuvei’s merchant cash advance program: Kaloot.

Merchant Cash Advance Programs: Everything You Need to Know

About the Author

Gigi Beyene, SVP, US Partners

With Nuvei since 2007, as an expert in strategic channel development and partnership management, Gigi’s collaborative techniques and leadership have helped ISOs both launch and grow successful merchant portfolios.

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