If you’re a small business owner in New York, NY, you may have wondered what your best options are for obtaining funds when you need them. The alternative business finance industry—commonly known as MCA, which stands for merchant cash advance —offers a means of getting funds for your business that has many advantages over applying for an ordinary business loan. Here is a brief overview of how MCA works.
Methods of funding in MCA. Within MCA, there are two primary methods of obtaining money: merchant cash advances and ACH withholding. With a merchant cash advance, the business receives a sum of money in exchange for a commitment to pay the funder a percentage of future revenues, taken out on a daily basis. With ACH withholding, the funder provides the business with a lump sum, then deducts a small amount from the business’s checking account regularly until the debt is completely paid off.
The difference between funders and brokers. There are two chief players in the MCA industry: funders and brokers. While funders provide money to businesses that need it, brokers act on behalf of businesses that need money by finding and negotiating the deals. Given the number of applications received by funders, however, it isn’t always easy for brokers to win successful deals for their clients.
How deal placement assistance works. Deal placement assistance companies aim to facilitate successful deals between funders and brokers. By serving as a go-between in the funder-broker relationship, a deal placement assistance company can ensure that deal applications are properly prepared and filed, making them much more likely to receive positive responses from funders. A deal placement assistance service can also develop long-term relationships with both funders and brokers, leading to more successful deals—including deals for businesses that may have had trouble finding financial assistance in the past.