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Understanding Merchant Cash Advances

Posted by JAMES PESTA
4 March, 2016

merchant cash advanceIt’s not every day you look for a merchant cash advance, so it should come as no surprise that many of the terms may seem foreign to you. To help you understand what the merchant cash advance industry is all about, we at Rapid Capital Funding (RCF) have put together a short vocabulary list to familiarize you with a few of the key terms used in the industry.

Business/Merchant cash advance

A cash advance is not a loan. It is an advance on a business’s future sales and receivables. RCF is paid back by keeping a percentage of a merchant’s future credit card sales, or an amount debited from a business checking account via an ACH.

Factor Rate

The one-time, non-compounding cost of capital or money advanced.

ACH

Automated Clearing House (ACH) is an electronic fund transfer between financial institutions for reoccurring payments.

EIN

Used to identify a business entity to the Internal Revenue Service. Also known as Federal Tax Identification Number.

DBA (Doing Business As):

The designation (like AKA for also known as) for any non-official name the business uses.

Limited Liability Company (LLC)

A legal form of a company that provides limited liability to its owners in different jurisdictions.

A few of the terms we featured were general business terms, but we wanted to ensure that everyone is on the same page when you get a merchant cash advance from Rapid Capital Funding and fill out the necessary documentation. Click here to learn even more from our full glossary.

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