A merchant cash advance is basically a loan for a small business. The lender provides a set amount of money and then the business pays it back by giving the lender a percentage of all their credit card and debit card sales.
There are two common ways that a merchant cash advance loan can be set up. The first is that the lender gives you a cash advance, then you agree that they will get a percentage of all of your future credit and debit card payments until the advance is returned. The second way is that after receiving the cash advance, you pay it back through weekly or monthly automatic debit payments. This means that the lender will use electronic transfers to pull the payments directly from your bank account. This is called an ACH merchant cash advance. And ACH stands for “automated clearing house.” This is a digital network used to transfer money.1
While a merchant cash advance is specifically meant for businesses, there are a number of other types of cash advances for individual borrowers. These include payday loan cash advances, employer cash advances, and credit card cash advances.
A payday loan cash advance would be the most common type of cash advance for borrowers with poor credit scores. These are short-term, small cash loans that need to be repaid within about two weeks on average. They tend to carry higher interest rates than some other personal loans.
A credit card cash advance is when you use your credit card to withdraw cash. The interest rate on these cash advances can be quite high. There is also no grace period, meaning the interest will start to accrue immediately. But if you can’t get approved for a credit card in the first place, you may have to consider payday loan or employer cash advances.
An employer cash advance is when your employer gives you cash up front, and then deducts that amount from your next paycheck. These can be a good option depending on your employer. They may be willing to work with you, and you may even be able to avoid paying interest.