Disclaimer: Information in the merchant cash advance articles is provided for general information only, does not constitute financial advice, and does not necessarily describe Biz2Credit commercial financing products. In fact, information in the merchant cash advance articles often covers financial products that Biz2Credit does not currently offer.

If you run any sort of healthcare-related business, you know that you can come under cash crunches from time to time. If patients or insurance companies are running late to pay invoices, or you need to make an unexpected purchase and need capital in a hurry, a merchant cash advance (MCA) can be a solid small business cash advance financing option.

Here’s what you need to know about how healthcare businesses can get a merchant cash advance, and what they can use it for.

What is a Merchant Cash Advance

A merchant cash advance is a type of funding when a business sells future receivables for an upfront lump sum of cash. This gives businesses liquidity for immediate needs like payroll, purchasing supplies, and more. The advance amount will vary based on how much in sales the business makes.

In the case of healthcare businesses, this could be for replacing essential equipment, purchasing needed medications, or ensuring you can meet payroll if insurance companies are behind on payment.

This isn’t a loan, but rather selling future receipts for upfront working capital.

Benefits of Merchant Cash Advance for Healthcare Businesses

Here are the benefits of using a merchant cash advance for your business needs:

Quick liquidity

Once you’re approved for a merchant cash advance, you may be able to get a deposit into your business bank account in as little as a few days. The funding approval process is much quicker than a traditional term loan from a traditional bank, giving business owners the opportunity to meet their cash needs quickly.

Few documents needed

Qualifying for a merchant cash advance is largely based on bank statements, past credit card transactions, and future credit card sales. This is a much different way of small business financing, compared to a term loan.

A good credit score isn’t required

A business cash advance loan more closely reflects a traditional loan, while a merchant cash advance is simply selling your future receipts for an upfront payment. Because an MCA isn’t a loan, MCA lenders may not need your personal credit score or credit history. This also means there is no interest rate attached to the advance, but rather a factor rate.

Your monthly payments will fluctuate with your business

When you use a small business cash advance, you will have a set percentage of your future sales that you’re selling. This means that if you have a slow month, the amount you pay will also decrease. This is a great benefit as with a traditional fixed-rate term loan, your monthly payment will remain the same until the loan is paid off.

The repayment period with a MCA can vary, so be sure to talk to the funding provider about what the repayment schedule will look like.

What Should a Healthcare Business Use an MCA For

The United States spend trillions of dollars each year in healthcare. Practices were also spent in tandem, with estimated costs between 60-70% of total revenue. The lion’s share of those expenditures is payroll, benefits for employees and building facilities.

However, because an MCA can come with significant costs, it’s important to use this financing option for an urgent need. If a long-term financing need comes up, you may also consider a business line or credit or business term loan.

Here are a few short-term expenses an urgent care center, dental practice, wellness center or other type of business in the healthcare space could use a small business cash advance for:

• Medical equipment and tech
• Patient acquisition from marketing channels
• Payroll and staffing expenses
• Compliance costs
• Inventory and supplies

Where to get a Merchant Cash Advance

Traditional lenders offer small business loans, but don’t typically offer instant merchant cash advance or business cash advance loans. Online lenders and alternative lenders are much more likely to offer small business cash advances. The advantage is that these lenders tend to move faster and can potentially approve your business quicker than a commercial lender would. Additionally, the application process can be quite straightforward.

Regardless of where you get a merchant cash advance, be sure to shop around between multiple merchant cash advance providers to find the best deal for your business. This includes comparing factor rates, repayment terms, and customer reviews to find a reliable business cash advance provider.

Bottom line

For small business owners, maintaining financial flexibility is essential to ensure smooth operations and continued growth. A merchant cash advance provides a practical business financing solution for covering urgent expenses, managing payroll, upgrading equipment, or expanding facilities without the lengthy approval processes of traditional loans.

While MCAs are a type of financing with higher costs, their fast access to capital and flexible repayment terms make them an attractive option for healthcare providers navigating seasonal cash flow challenges or unexpected expenses.

FAQs about Merchant Cash Advance

Can you get a cash advance with a business account?

Many financial institutions offer cash advances through business credit cards or lines of credit tied to business accounts. However, a business cash advance loan is a funding option that can come with significant fees, so be sure to research what it will cost before using it.

How do I qualify for a merchant cash advance?

Your business typically needs to have consistent credit card or debit card sales and a few months of operating history. Lenders also assess factors like your monthly revenue, business type, and any outstanding debts to confirm eligibility.

Can I get a merchant cash advance with bad credit?

Yes, many MCA providers offer small business cash advances to businesses with bad credit.

Is a business cash advance a good idea?

A business cash advance loan can be helpful for short-term cash flow needs, but it often comes with high fees. Be sure to carefully assess whether the immediate funds outweigh the long-term costs and impact on your business’s finances. 

How does a merchant cash advance work?

A merchant cash advance (MCA) provides a lump sum of cash to a business in exchange for a percentage of its future credit card or debit card sales.

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