By Scott Griest

Small business lending is up 18 percent in the last 12 months, a testament to how Main Street America is returning to healthy profits and growth after the economic downturn. However, navigating the sea of lending options can be overwhelming for most business owners. Most turn to traditional lending such as banks, but 50% of loan applications are rejected. For businesses that look to VC money, only 1% secure a deal, but the downside is losing equity in your business.

One viable alternative finance option for many small businesses is a merchant cash advance (MCA). A merchant cash advance is a quick and flexible financing option that can provide solid businesses with necessary capital in days, not months like traditional lenders.

Below are tips that can help determine if your business should consider an MCA:

  • You have a solid and stable business, but still can’t get access to capital – Banks reject half of small business loan applications because they rely on the credit quality of the owner and the value of collateral to support the credit decision. Banks can overlook and ignore good businesses because they don’t look at the overall health of the business based on its sales. A major benefit of working with an MCA involves a focus on the general health and future prospects of the business, not the owner’s personal FICO score.
  • You need cash quickly – For example, you get hundreds of unexpected orders and need to buy more inventory or supplies or need to work on renovations. An MCA can fund in 5 – 10 days. A bank will typically take more than one month to complete a loan.
  • You are a seasonal business – Seasonal businesses need cash during high season and require flexible repayment schedules to match their business activity. Unlike a loan, the repayment schedule of an MCA contract is tied to the amount of the merchant’s future sales. This allows a merchant with seasonal sales to gain access to much larger amounts of capital and decreases the merchant’s risk of default or having to repay a high, fixed amount per month during their slow season.
  • You have a young business (under 5 years old) – While most banks and other lenders require 3 – 5 years minimum business experience, most MCAs will provide financing after just the first year. To qualify with most MCAs, you only need to have been in business for one year and process at least $5,000 in credit card sales each month for the last four months.

Lastly, it’s important to look for ethical MCAs fully committed to the overall success of the small businesses they serve. For example, look for an MCA that applies a holistic approach to determine the funding amount and is willing to tell a business what is truly the right amount they can afford. Beware of unethical MCAs who are more interested in squeezing out high repayments from businesses.

When you work with a savvy MCA that allows you to get quick funding and re-pay it in a time structure that best works for your business, your business is able to address its needs – whether you need more inventory, want to jump on an immediate opportunity, execute a marketing campaign, relocate or expand – and grow as a result.

Scott Griest is founder and chief executive officer of American Financial Solutions (AFS), one of the nation’s fastest-growing merchant cash advances for small businesses. For more information, visit