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The Wall Street Journal recently posted an article about the growth in the merchant cash advance industry. What are your thoughts? Has your business used a cash advance or would you consider it?

A Merchant Cash Advance is a lump sum payment to a business in exchange for an agreed upon percentage of future credit card and/or debit card sales. Merchant Cash Advance companies provide funds to businesses in exchange for a percentage of the businesses daily credit card income, directly from the processor that clears and settles the credit card payment. A company's remittances are drawn from customers' debit- and credit-card purchases on a daily basis until the obligation has been met. Most providers form partnerships with card-payment processors and take payments directly from a business owner's card-swipe terminal.

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I think merchant cash advances can be a great way to get funding for future growth or investments for a business.  I think a big key is making sure the right loan is matched to the right business needs.  Currently businesses have numerous options when it comes to financing and merchant cash advances are just 1 choice.  The key is to look at all your loan options, compare them side by side and weigh the pros and cons of each type of loan.  It really is about finding the best loan options for each scenario.  Credit card cash advances are a great way for thriving businesses to free up cash flow but all options should be considered and compared before any long term large decisions are made.

I used a merchant cash advance as a form of restaurant finance to give the place a makeover. Found it quite an easy process and business picked up as a result meaning I paid it back quicker than expected.

Cash advances are extremely expensive! Although I'm sure they can be beneficial when all other funding resources have been exhausted, I wouldn't use a cash advance unless it was an extreme emergency... 

JUST MY 2 CENTS ;)

It is just like selling the future income, the merchant cash advance provider takes a small percentage of the from the credit card processing until the agreed sum is collected from the small business owner. 

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