What is Merchant Cash Advance (MCA) and how MCA works. This document describes the players and what is involved in setting up a merchant cash advance deal.

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Merchant Cash Advance
Overview
April 2013

2. What is Merchant Cash Advance?
§ A Business (“merchant”) receives upfront cash by signing over its future sales.
§ Terms are usually less than a year – 3 to 9 month terms.
§ Merchants repay cash advance on a daily basis.
§ Merchant cash advances (“MCA”) are not loans in the US.
§ MCAs are processed faster than traditional business loans.
§ Most MCA deals do not require business owners to offer collateral.
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3. Merchant Cash Advance Players
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Broker Funder
Merchant CollectorBusinesses that will take
a lump sum cash today in
exchange for future sales.
Companies that connect
Merchants with Funders.
Companies that help
Funding Companies
retrieve future receivables
from Merchants.
Companies with cash to
buy future receivables
from Merchants.

4. How Merchant Cash Advance Works?
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Broker Funder
Merchant Collector
Application
Application
Commission
Daily Sales
Funds
FundsContact Contract

5. Broker contacts Merchant
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Broker
Merchant
Contact
• Broker contacts a Merchant to offer a
$10,000 cash advance in exchange for
$11,000 of future sales (10% interest
rate).
• The Broker will need the Merchant to
complete a simple Merchant Cash
Advance application.

6. Merchant completes Merchant Cash Advance application
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Broker
Merchant
Application
§ Merchant returns application with the
following documents:
» Owner’s personal information (i.e., DoB, etc.);
» Business related information (i.e., EIN, etc.);
» Six months of Business’ bank statements;
» Six months of Business’ credit card
processing history;
» Existing liens or judgments against the
business or owners;
» Tax returns for the business and its owners.
§ Merchant is current generating $30,000 a
month in sales.

7. Broker seeks Funder for Merchant Cash Advance
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Broker FunderApplication
§ Broker takes Merchant’s application to its network of Funders to get
the Merchant a $10,000 cash advance.

8. Funder evaluates the Merchant
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Broker Funder
Commission
§ Funder will evaluate the Merchant’s credit worthiness by putting it
through a rigorous underwriting process, which includes:
» Confirmation of $30,000 monthly sales.
» Owner and business credit scores.
» Existing loans, liens, etc.
§ Funder will pay the Broker a commission for introducing the
Merchant.

9. Funder funds the Merchant
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Funder
§ Merchant agrees to the terms.
§ Merchant and Funder will also
need to agree to a Collector to
help divide the daily sales.
§ Funder provides a $10,000
cash infusion to the Merchant’s
business.
Merchant
§ Funder makes the following
offer to the Merchant:
» $10,000 for $11,000 (10% rate).
» Merchant must sign over 50% of
its daily sales to repay the
advanced amount.

10. Funder contacts Collector
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§ Funder shares Merchant Cash Advance
contact with a Collector who will be
responsible for collecting and distributing
the Merchant’s daily sales.
§ A Collector can be one of the following
companies:
» Credit card processor;
» ACH processor;
» Lockbox provider;
» Bank; or
» Funder itself
Funder
Collector
Contract

11. Merchant’s daily sales are collected by the Collector
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CollectorMerchant
Daily Sales
§ Merchant generates $1,000 in daily credit card sales.
§ Daily sales are collected by the Collector per the Merchant Cash
Advance agreement with the Funder.

12. Collector disburses funds to Funder and Merchant
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Funder
Merchant
§ The Collector collects $1,000 per day from
the Merchant at sends $500 to the Funder
and $500 to the Merchant.
§ Based on current re-payment rate ($500 a
day), Merchant repays the $11,000 in about
22 days.
Collector
Funds
Funds

13. MCA Suite Value Proposition
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Broker Funder
Merchant Collector
Application
Application
Commission
Daily Sales
Funds
FundsContact Contract
§ Manage underwriting process
§ Track financial transactions of all deals
§ Administer commissions
§ Manage contacts
§ Manage merchant
cash advance
applications and
related documents
§ Track daily remittance and deal status
§ Alerts and reports to manage collections
§ Tie daily
remittance to
deals
§ Integration with
payment gateways

14. MCA Benefits to Brokers & Funders
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Features Brokers Funders
Contact Management ✔ ✔
Document Management ✔ ✔
Deal Tracking – from underwriting to fund tracking ✔
Deal Refinance ✔
Payment Gateway Integration ✔
Commission Administration ✔ ✔
Reporting ✔ ✔
Workflow and Task Management ✔ ✔

15. MCA Suite Contact Information
To learn more about MCA Suite and how we can improve your merchant cash
advance operations, please contact us for a demo:
www.mcasuite.com
info@mcasuite.com
twitter.com/MCASuite
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