Small business owners who do not operate merchant businesses can not use merchant cash advances, because as mentioned above, repayments are made only through a small percentage that is deducted from the business' daily credit card sales.
Expensive
Merchant cash advances are more expensive than bank loans because advance providers take on a bigger risk than banks. Therefore, merchant services sales rep who qualify for bank loans are encouraged to take them instead.
Not for startups
Merchants must build up at least a six month track record before becoming eligible for a merchant cash advance, because providers use applicants' monthly credit card sales to determine how much they qualify to receive.
Startup businesses do not have a track record and/or merchant statements and therefore are ineligible for merchant cash advances.
