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MCA Offers: What You Need to Know and Do

Green background with an illustration of an icon pointing to the document saying offer, along with the words merchant cash advance offer

By Richard Wilson

Last Updated on

Estimated read time: 7 minutes

If your application for an MCA gets approved, the MCA provider will send you a merchant cash advance offer. This offer outlines the amount they’re willing to provide, the terms of repayment, and the associated costs. It’s important to note that MCA providers don’t always grant the exact amount and repayment terms you initially requested. Instead, they carefully assess your businesses credit card sales and other financial information to determine how much they are willing to advance your business, for how much and under what terms. 

This article walks you through the process of receiving, evaluating, and making an informed decision about an MCA offer, ensuring that business owners have the necessary knowledge before making a commitment.

Green background with an illustration of an icon pointing to the document saying offer

Step 1: Receiving the Offer

After your MCA application gains approval, the MCA provider sends you a merchant cash advance offer. This offer usually arrives electronically in your email inbox for easy access. Click the provided offer link to view it. If you’re dealing directly with an MCA provider, they’ll direct you to a secure online portal containing the offer. However, if you’re working with a broker, they might prefer a personalized approach, discussing the offer with you over the phone.

Step 2: Reviewing the Offer

It’s very important to thoroughly examine the offer before making any commitments. In the MCA industry, where financial regulations are weak, taking the time to review ensures that the offer aligns with your business’s best financial interests.

  • Advance Amount: This is the total sum the MCA provider offers to advance to your business.
  • Factor Rate: It reveals the cost of the advance, influencing the overall repayment amount.
  • Repayment Terms: This section clarifies how the repayment will be structured, often linked to a percentage of your daily credit card sales or bank deposits.
  • Retrieval Rate: It signifies the percentage of daily credit card sales or bank deposits that the MCA provider will retain until the advance is fully settled.
  • Holdback Amount: You might find a daily or weekly holdback amount, signifying the portion of your sales dedicated to repaying the advance.
  • Repayment Duration: This estimate tells you how long it’ll take to clear the advance based on your daily sales.
  • Fees and Costs: Any extra charges related to the advance, like origination or processing fees, should be laid out for transparency.

Step 3: Evaluating and Negotiating

Negotiating the terms of your MCA offer is a vital step that shouldn’t be overlooked. If your business has strong credit card sales, MCA providers may be open to reducing the factor rate they intend to charge you. The contact information for the MCA provider will be clearly displayed on your offer, so you can reach out and try to negotiate a lower factor rate and better terms. Negotiating with MCA providers is a common practice, so don’t hesitate to get in touch and aim for better terms. To figure out how much money a lower factor rate might save you can use our MCA calculator.

Step 4: Accepting or Declining the Offer

Once you’ve thoroughly reviewed the offer and, if necessary, negotiated the terms, it’s time to make a decision – either to accept or decline the offer. This step often involves electronically signing to confirm you accept the offer. If you choose to accept the offer, you’ll be directed to the MCA agreement, which provides a more detailed breakdown of the MCA offer’s terms and conditions. This agreement outlines the expectations set by the MCA provider, including how they will work with you. If you’re working with a broker, they will assist you in completing the signing process, whether it involves physical paperwork or an online procedure, depending on the arrangements made with the MCA provider.

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The Bottom Line

As a business owner, it’s essential to carefully evaluate the MCA offer you receive. Take your time, perhaps a day or two, to review the offer thoroughly. Don’t hesitate to negotiate for more favorable rates on your MCA offer. You can also explore other offers from different MCA providers before considering the one you have. By following these steps and understanding the key elements of the offer, you can make well-informed decisions when assessing MCA offers.

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