Need fast funding for your eCommerce business? Merchant Cash Advances (MCAs) provide upfront cash in exchange for a percentage of future sales. They’re ideal for businesses with fluctuating revenue, offering quick approvals and flexible repayments. Here’s what you need to know:
- How It Works: Get funds upfront and repay through a percentage of daily sales. Payments adjust based on your revenue.
- Key Benefits: Fast funding (under 24 hours), no personal credit checks, and repayment flexibility.
- Drawbacks: Fees can be higher compared to traditional loans, and costs may vary depending on sales cycles.
Onramp Funds vs. Traditional MCAs
Onramp Funds offers a modern take on MCAs, integrating with platforms like Amazon and Shopify for tailored funding. Here’s a quick comparison:
| Aspect | Traditional MCAs | Onramp Funds |
|---|---|---|
| Approval Process | Based on sales history | Detailed analysis of business data |
| Funding Speed | 24–72 hours | Less than 24 hours |
| Repayment Terms | Fixed daily/weekly amounts | Percentage of daily sales |
| Fees | Variable rates | Transparent, 2–8% fixed fee |
| Platform Support | Limited | Integrates with major platforms |
Who Should Use It?
- Seasonal or Variable Sales: Onramp Funds offers repayment flexibility based on revenue.
- Consistent Sales: Traditional MCAs are a better fit if your revenue is steady.
Choose based on your cash flow needs and sales patterns. For fluctuating sales, Onramp Funds offers more flexibility and transparency.
Merchant Cash Advance Pros and Cons
1. How Merchant Cash Advances Work
Merchant cash advances provide businesses with upfront funds in exchange for a set percentage of future sales. Unlike traditional loans with fixed monthly payments, the repayment adjusts automatically based on daily sales. When sales are strong, you pay more; during slower periods, you pay less. This makes it a flexible funding option.
The terms of the advance are determined by factors like your sales history, cash flow, and existing debts. Once approved, a percentage of your daily deposits is automatically deducted to repay the advance over time. This system ensures payments stay manageable, even during slower periods.
Automatic deductions simplify the repayment process and give you real-time updates on your progress. As one business owner shared:
"Onramp has simplified cash flow by automating everything: easy to request, set it and forget it payments - quick and fast!" - Torrie V., Founder and Owner of Torrie's Natural
This adaptable repayment structure works well with fluctuating sales cycles, setting the stage for solutions like Onramp Funds, which will be discussed in the next section.
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2. How Onramp Funds Works
Onramp Funds simplifies funding for eCommerce businesses by connecting directly with popular marketplaces like Amazon, Shopify, Walmart Marketplace, WooCommerce, BigCommerce, Squarespace, and TikTok Shop. By analyzing business performance through these integrations, the platform offers funding options tailored to your specific needs.
Here’s how it works: First, you get an estimate based on your business metrics. Next, you securely link your store to Onramp’s platform. Finally, you receive funding offers that take into account your sales history, cash flow trends, and any existing debts. This data-driven approach sets Onramp apart from traditional merchant cash advances (MCAs).
The repayment system is tied to your daily sales, making it easier to manage cash flow. Payments automatically adjust based on how your business is performing, so you’re not overburdened during slower sales periods. This method helps keep your operations running smoothly, whether it’s a busy season or a quieter one.
Key Features of Onramp Funds
| Feature | Details |
|---|---|
| Minimum Requirements | $3,000+ monthly sales |
| Fee Structure | 2-8% fixed fee |
| Repayment Method | Percentage of daily sales |
| Funding Timeline | Less than 24 hours after approval |
| Platform Support | Amazon, Shopify, Walmart, WooCommerce, BigCommerce, Squarespace, TikTok Shop |
"Onramp's process is very straightforward and easy to navigate. I had funds in my account within a day of final approval." - Adam B., The Full Spectrum Company
Onramp’s team takes a personalized approach, evaluating your business’s sales patterns, cash flow needs, and overall financial health to determine the right funding amount and terms. This ensures the financing supports your growth without putting undue strain on your operations.
Benefits and Drawbacks
Here's a comparison of Traditional MCAs and Onramp Funds to help you weigh their pros and cons:
| Aspect | Traditional MCAs | Onramp Funds |
|---|---|---|
| Approval Process | Based on sales history | Uses detailed analysis of business performance across multiple metrics |
| Funding Speed | 24–72 hours | Less than 24 hours after approval |
| Minimum Requirements | Varies by provider | Requires $3,000+ in monthly sales |
| Fee Structure | Complex and variable rates | Transparent, fixed fee between 2–8% |
| Platform Integration | Limited or none | Directly integrates with platforms like Amazon, Shopify, and Walmart |
| Repayment Terms | Fixed daily or weekly amounts | Flexible repayments based on a percentage of daily sales |
| Business Impact | Can strain cash flow during slow periods | Adjusts repayments according to business performance |
Traditional MCAs provide fast funding but often lack flexibility and transparency. On the other hand, solutions like Onramp Funds address these gaps. For instance, businesses using Onramp Funds have reported a 20% revenue increase within 180 days.
When deciding between these options, consider the following factors:
- Cash Flow Management: Fixed repayment schedules with MCAs can be tough during slower months. Percentage-based repayments from providers like Onramp Funds align better with your sales, offering more breathing room.
- Cost Clarity: Hidden fees can make MCAs more expensive than they seem. Opt for providers with clear, fixed-fee structures to avoid surprises.
- Seamless Integration: Funding platforms that integrate directly with eCommerce systems (e.g., Shopify, Amazon) simplify the process and provide more accurate funding offers.
- Support and Guidance: Some providers, like Onramp Funds, go beyond funding by offering tailored advice to help you use the capital effectively for growth.
Making Your Choice
When deciding on funding, base your choice on your business's sales patterns. Here's what to consider:
- Steady Sales: Fixed MCAs are a solid option if your revenue is consistent.
- Fluctuating Sales: Revenue-based financing provides the flexibility you might need.
Eric Youngstrom, founder of Onramp Funds, highlights the importance of structured offers that align with your cash flow to help reduce debt risks.
Here’s a quick breakdown to guide your decision:
| Business Characteristic | Best Option | Why It Works |
|---|---|---|
| Seasonal Sales | Onramp Funds | Payments adjust based on revenue, easing cash flow during slower periods |
| Multi-Channel Sales | Onramp Funds | Supports multiple platforms, simplifying operations and offering more flexibility |
| Steady Daily Revenue | Either Option | Fixed payments are manageable if income is predictable |
Using these factors, weigh your options carefully. If your sales vary and you need flexibility, revenue-based financing like Onramp Funds is a smart choice. For predictable income and quick access to funds, traditional MCAs could be a better fit.
