When you need working capital quickly, traditional loans are just not going to get the job done. They typically require weeks of preparation and waiting before approval, and closing times can be days or even weeks after that comes. That’s why many companies turn to short-term lending options based on their business assets like the merchant cash advance.

You need to do a significant part of your business through credit and debit transactions to get a large advance from an MCA, but as long as you do have the right volume coming through your merchant account, approvals are pretty easy to get. The advance is designed to be paid back quickly, and the minimum payment flexes with your income. If you make more money, you pay more and it gets paid off faster. Before you apply for an MCA, it is important to understand a few things about how applying for one differs from applying for a loan.

1. Lenders Need Separated Income Statements

Most loans and cash advances are concerned with your income, but they only require verification of the numbers. Since a merchant cash advance is based on the traffic through your merchant account, lenders need to see those numbers as well as your overall income. This lets them know how much money you average through the account so they can determine the right advance size.

It also lets them see whether or not your business has the income to cover its other debt obligations without relying on credit card transactions. If that is the case, then a larger advance becomes less risky to both parties.

2. Approval Decisions Move Quickly

Since the MCA is designed to give you working capital when you need it, approvals must go through quickly. It simply would not be a useful lending model otherwise. That means you should be prepared to hear back in just a couple of business days. Fast pre-approvals with a credit check could even get you a tentative offer in 24 hours from some lenders. This also means you need to be responsive to requests for more information, otherwise, it could slow down your application.

3. Your Credit Score Is Important

Most asset-based cash advance options are built to take the emphasis off your credit score. While the merchant cash advance does not put as much emphasis on that score as a traditional loan would, it is important because the interest rate and total size of the advance depends on the lender’s risk calculations.

Lower credit scores indicate higher risk, so offers tend to be smaller and more expensive. Keeping a good credit score for your business means lowering the cost of capital when you borrow.