Merchant cash advances allow small businesses access to quick capital. MCAs are paid off through credit card transactions. Instead of establishing a payment schedule with a fixed amount due each month, MCA companies will take a percentage of your daily credit card transactions until the loan is paid off. This is helpful because it means the amount you pay per month is directly tied to the amount of revenue you bring in. As a flexible loan option, MCAs provide businesses with access to quick funding without intense loan requirements.
After much research and analysis, we recommend Rapid Finance as our the best alternative lender for merchant cash advances in 2019. To understand how we selected our best picks and view a comprehensive list of alternative lenders, visit our best picks page.
Why Rapid Finance?
Rapid Finance has an easy application process, quick funding and excellent customer service. Business owners can get funding between $5,000 and $500,000, which is one of the highest advances of any company we reviewed. Here is a breakdown of why it's our best pick.
Application and Approval Process
Rapid Finance has a simple, short application and approval process. Before you even contact the company, you can fill out an instant quote questionnaire on its website. If you're interested in partnering with Rapid Finance, you can either fill out an online application or call the company to provide your information directly to an account executive. You answer some initial basic questions – where your business is located, how long you've been open and your total monthly sales – to get an estimate of how much of an advance you might be eligible for.
Once you've prequalified, the company provides a preliminary funding amount. This isn't the amount you may ultimately be approved for, but it gives you an idea of how much of an advance you might receive so you can make an informed decision on whether to proceed with the application process. We like that Rapid Finance gives you this early estimate. It's an ideal way to get an understanding of what you qualify for and whether Rapid Finance is the right company for your financial needs. Most of the other lenders we examined don't provide an estimate until the entire application is complete.
After submitting your application, you get to see a more accurate loan amount. You then need to confirm your total monthly revenue and credit card sales by providing bank and credit card statements.
An underwriter will review all the information and run a credit check to determine if you're ultimately approved for a cash advance and, if so, the amount and terms. The approval process can be completed within a couple of hours, with funds available in as little as one day. This makes Rapid Finance an ideal quick-funding option.
Several variables determine which businesses qualify for cash advances. Your business's total monthly revenue and credit card sales, as well as your credit score, determine your eligibility. Overall, Rapid Finance has pretty relaxed qualifications. The company focuses mainly on revenue rather than credit score when reviewing loan applicants.
Although there are no exact rules about who gets approved, there are several minimum requirements to even be considered. You must provide a government-issued photo ID, a voided check from a business checking account, three bank statements from your business's account, and your last three credit card processing statements.
Rapid Finance's minimum requirements for the time a business needs to be open and its credit card revenue are lower than what most lenders require. Many lenders require businesses to be established for at least a year before they can get funding. Rapid Finance provides various funding levels based on qualifications, with more established businesses able to qualify for more funding.
Merchant cash advances are different from traditional small business loans. With traditional small business loans, you make monthly loan payments, but cash advances are paid back via credit card sales. You repay the loan by giving Rapid Finance a fixed percentage of your future Visa, MasterCard, American Express and Discover card sales until you've paid off the predetermined payback amount.
One way Rapid Finance determines the exact percentage it will charge your company is by comparing your total monthly sales to your monthly credit card sales. Businesses with a high proportion of credit card sales typically have a lower fixed percentage fee, while those with lower credit card sales have a higher percentage. Your business's financial history and other qualifications are also considerations for the interest rate.
What makes cash advances so attractive is that payments are linked solely to your business's daily credit card sales, so when sales are slow, payments are small. We like that there are no monthly minimums with Rapid Finance. Some of the other lenders we considered require you to pay a minimum amount each month, regardless of your credit card revenue. Rapid Finance's model means you pay off more of your loan when your business is doing well, while Rapid Finance will take less money when sales are down.
Rapid Finance doesn't make you change credit card processors to get an advance. Many of the other lenders we looked at have specific lists of processors you need to use, or require you to switch to their preferred processor for you to be eligible for a loan. If Rapid Finance doesn't have a relationship with your credit card processor, it sets up a pass-through account. If it does work with your credit card processor, the processor will withhold Rapid Finance's percentage from your credit card sales and transfer that money directly to Rapid Finance on a daily basis.
Once you have the loan, there are no restrictions on its uses. Some of the other lenders we evaluated place limits on how you can spend the money. The lack of restrictions and collateral requirement makes Rapid Finance's loans flexible for small business owners looking for quick funding.
Customer Service and Reputation
We were very impressed with the customer service we received from Rapid Finance. To test the type of support you can expect, we called the lender multiple times, posing as a business owner interested in a cash advance.
Each time we called, a representative answered quickly. These reps skipped the hard sell and instead spent time answering our questions. Most of the other lenders we spoke to were more interested in determining our loan eligibility before they answered any of our questions.
Throughout our calls, all our questions were answered thoroughly, leaving us with a clear understanding of how Rapid Finance's merchant cash advances work. Some of the other lenders we spoke with either couldn't answer all of our questions or offered short answers that didn't give us the clarity we needed.
After our calls, the representatives followed up with an email encouraging us to contact them with any other concerns. We did send follow-up questions on several occasions to gauge the type of replies you can expect. Each time, we received a response – containing thorough answers – within minutes.
You can reach the Rapid Finance customer service department by phone or email between 9 a.m. and 6 p.m. (ET) Monday through Friday.
Rapid Finance is an accredited member of the Better Business Bureau with an A+ rating. As of March 2019, only three complaints had been filed against the lender. That is far fewer than some of the other lenders we considered. You can read more about the nature of the complaints on the BBB website. The company scored 4.9 out of 5 stars on 176 customer reviews. The number of positive reviews was significantly higher than the negative ones, cementing Rapid Finance as a company that provides a solid service.
The biggest downside of Rapid Finance is that it doesn't work with online businesses. To qualify for a loan, you need a physical location, which many small and new businesses don't have.
Ready to choose an alternative lender? Here's a breakdown of our complete coverage: