How to Become a Merchant Cash Advance Lender

Anyone who runs a business knows too well that slow or limited cash flow is not a strange occurrence when running a business. Your finances tend to fluctuate with seasons hence you might at one point or another need to get financial help. 

Taking advantage of these options will help alleviate some of your worries. There are many options available today from traditional bank loans to more modern methods of acquiring finances such as crowdfunding and now merchant cash advance lending.

How to Become a Merchant Cash Advance Lender

What is Merchant Cash Advance Lending

Merchant Cash Advance Lending is a short-term lending structure for businesses that allows business owners to acquire loans for their businesses promptly. This advance is given to your firm’s future credit and debit card sales. 

In other words, you are borrowing against your future profits. 

These types of loans are often easy to access because unlike traditional loans, they do not have a lot of restrictions attached to them. For instance, with merchant cash advance lending business owners can secure a loan regardless of their credit card score. 

There are many opportunities today for private money lenders in different niches each with its business models. 

Below is a step by step guide to help you become a merchant cash advance lender;

Determine your target clients

Too often people jump into starting an idea without thinking about who their customers will be. You need to be very clear as to who you want to work with. This will help clarify your mission. 

Next, figure out how you are going to provide value to your customers. What is going to set you apart from your competitors?

Identify your area of operation

A merchant cash advance lending operation has a greater chance of being successful when you focus on local businesses. You should invest in where you know and what you know. Therefore, as you set shop, you need to ensure that your clients are within reach of your office. 

In addition to this, you will always be in a better position running a business within your local community since it is easier for you to monitor and have a better understanding of the marketplace. 

Write a business plan

This just helps you to put everything into perspective such as your target market, finances, mission, etc. 

A lot of mistakes and setbacks that come up once a business has been launched could have foreseen and well avoided with a good business plan.

When writing up your business plan you need to conduct extensive market research. This can be done through surveys, focus groups, and reading through public data. Market research will help you identify the needs of your target clients as well as their behavior and preferences. Similarly, you will be able to identify your competition hence putting you in a better position to take advantage of their weaknesses. 

Lastly, with everything planned out, you need to map out an exit strategy. Truth be told, a lot of things could go wrong with merchant cash advance lending. Many people involved in this practice will tell you that they are no stranger to lawsuits. Therefore, when worst comes to worst, you need to have a plan that will enable you to walk away in one piece. 

Figure out your Finance

There is a price you will have to pay to start any venture, no matter how small. You therefore need to have a plan on how you are going to cover those expenses. A lot of businesses have fallen out due to lack of finances to keep them going before their businesses can start generating profits. 

To get you out you with this, you will first need to;

Perform a break-even analysis: This will help you to determine how much money you will initially need up until your business is profitable.

Budget for your expenses: understand the purchases that are vital to your business this could include office rent, licenses and business permits, furniture, electronics, etc. The rest can be added on as the business advances. 

Funding Options: there are many options to get funding for your business when the need arises. Whether you qualify is dependent on certain factors such as creditworthiness, the amount you are requesting. Funding options available include;

Bank Loans: these are often difficult to secure but are a good starting point

Small Business Administration Loans: similar to bank loans only that they are easier to secure and do not have a high-interest payback rate. 

Investors: these are people who are willing to fund your idea with the only condition being that they get a stake in the business

Crowdfunding: these are campaigns that are run to help people raise capital by getting small individual contributions from several backers. There are different types of funders therefore you need to identify which ones are best suited for your situation. 

Register and get Insurance for your Business

For a business to be able to run legally, it needs to be registered at the registrar of business. Find out what are the requirements within your state then go ahead to obtain a license for your business. 

Tips for running a successful Merchant Cash Advance Lending

Be specific

As you market your services, you need to be specific about the types of loans you fund, your location, and loan limits. 


Always be truthful in your operations. Create a website where you will provide a list of all your services, clients, partners, and also true testimonials and images. Your website should also have your email address, contact information, and location. Be authentic in your operations and you will attract clients. 

Avoid Being a Middleman 

If you are not in the capacity to help a client, you would rather refer them to someone else who is equally trustworthy. Acting as a middleman for such deals will only divert your focus and at times even raise questions about your credibility. 

Also, this is putting your reputation at stake in the case where a deal fails to work out which in most cases they do because the cost ends up being so high for the client. 

In Conclusion

There are a lot of other things that you might want to put into consideration before making the big leap. The above listed are the most important ones hence you need to pay close attention to. 

A merchant cash advance lending business can be highly profitable, therefore, take your time and ensure you are well equipped to start this venture and you will reap great rewards.