What it’s for
Only worth a cautious educational comparison after you choose to explore it, document ongoing deposits, and review existing advances and cash-flow context. The questionnaire cannot determine affordability or funder approval.
- An explicitly chosen comparison of a future-receivables purchase structure—not a default working-capital option
- A narrowly defined business purpose supported by documented ongoing deposits
- A cash-flow review that accounts for fixed daily or weekly ACH withdrawals
- A broker-guided review of remittance, reconciliation, and existing advances
How it works
The provider purchases a specified amount of future business receivables for an upfront purchase price; this differs from a traditional loan. The agreement may collect the purchased amount through fixed daily or weekly ACH withdrawals. Legal characterization and obligations depend on the actual agreement and applicable law.
The agreement may call for fixed daily or weekly ACH withdrawals. Review the collection frequency, the purchased amount, reconciliation provisions, how reconciliation requests must be made when receipts change, what supporting information is required, and early-completion terms.
What funders look at
- Business bank deposits and their consistency
- NSFs or negative-balance activity
- Existing advances and their daily or weekly collection obligations
- Cash-flow capacity for the proposed fixed ACH withdrawals
How repayment or collection works
The agreement may call for fixed daily or weekly ACH withdrawals. Review the collection frequency, the purchased amount, reconciliation provisions, how reconciliation requests must be made when receipts change, what supporting information is required, and early-completion terms.
What it typically costs
A merchant cash advance can be structured as a purchase of future business revenue, not a traditional loan. A factor rate of 1.30 means $1.30 is repaid for every $1 provided. A factor rate is not an interest rate or APR.
Ask about the amount you receive, the full purchased amount, every fee, collection frequency, and whether finishing early changes the amount due.
What you'll need
The exact request depends on the business and transaction. These are common items to have ready for a provider conversation.
- Recent business bank statements
- Deposit or payment-processing information, if relevant
- Existing advance or financing details
- The complete proposed agreement and disclosures
Providers also commonly review: Bank-account deposit volume and consistency; NSFs, negative-balance patterns, and cash-flow volatility; Existing advances, remittances, and frequent collection obligations; The purchased amount, ACH withdrawal, and reconciliation language.
Watch-outs
FileFwd cash-flow caution: fixed daily or weekly ACH withdrawals can reduce cash available for payroll, materials, fuel, taxes, and existing obligations even when deposits fall. Stacking a second advance alongside existing collections can materially increase that pressure. A questionnaire is not an affordability determination; examine the complete written terms, including reconciliation-request procedures, with the broker and provider.
Agreements can include a business lien, personal guarantee, or other contractual protections. Terms vary and should be reviewed carefully.
Another path to compare: Compare a business line of credit for recurring needs, a term loan for a defined investment, or equipment financing for an eligible asset. Waiting, reducing the expense, or using internal funds can also be worth discussing. Availability depends on the business, provider and written terms.
Frequent collections can put pressure on payroll, materials, taxes, and existing payments. A future-revenue purchase is not an automatic best path just because another option may not fit.
Ask how reconciliation works if sales drop, and avoid stacking advances that could make daily or weekly collections harder to manage. We’ll tell you if an advance would strain your cash flow.