An MCA is a commonly used means of securing funds as an alternative to a traditional bank loan. It is used if a business has a low credit score, if a business has been denied a conventional bank loan, or if a business has an unpredictable/inconsistent stream of revenue. An MCA is not a loan. Rather, a business gets a lump sum quickly from a lender. Which is repaid with a contracted percentage of future sales revenues.
Common MCA Myths Debunked
Myth number 1: Business loans are always better. An MCA provides quick access to funds. Typically as soon as the day of application. Rather than waiting for a traditional business loan to be approved and funded. An MCA requires no collateral. Application approval is more lenient compared to a bank’s stringent requirements, especially when a credit report includes negative data.
Myth number 2: Only a bad business takes out an MCA. Banks today have a lot of regulatory restrictions. Alternative lenders, on the other hand, offer MCAs which provide faster and better funding for many credit ranges. An MCA also comes with no set repayment schedule, no collateral, and no accrued interest payments.
Myth number 3: An MCA will destroy a merchant’s credit. MCA products are typically not reported to a credit agency by an MCA provider. Repayments are made based on a business’ receivables rather than on a loan payment schedule.
Myth number 4: The MCA industry is a scam. This myth is based on a misunderstanding of the MCA industry. A qualified MCA provider will provide transparency for its fee structure and repayment process.
Myth number 5: MCAs are predatory. Just because an MCA comes from an alternative lender does not make the funding predatory. A professional MCA broker will belong to oversight organizations and will function according to federal guidelines.
Seek Expert Financing Assistance
Contact Porter Capital Group based in Southlake, TX, your commercial finance expert. Our team of finance professionals can help you secure capital for your needs and circumstances.