How does the repayment process for an MCA work?

accountingbyte
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Joined: Tue Oct 29, 2024 11:21 am

How does the repayment process for an MCA work?

Post by accountingbyte »

An MCA’S repayment usually depends on its business’s daily or weekly credit and debit card sales. Merchants allow lenders to retrieve an agreed amount of percentage of these sales until the advance plus fees has been paid. This structure is ideal for moments when the sales reduce by the fact that repayment is done according to the income generated. However, as with many other types of loans, the repayment may lead to the accumulation of costs that may be higher than those occasioned by conventional financing. Companies must first consider if this flexible repayment is satisfactory in terms of their cash flow to cater for the rest of the operational costs.