Merchant Cash Advance
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A merchant cash advance is one of the most convenient forms of business financing available for small businesses that bring in income primarily from credit card sales. Since travel agencies fall into this category, they can be ideal candidates for merchant cash advance funding. Merchant cash advances work differently than traditional business loans in that you, the merchant, receive the advance as a lump sum of cash in your bank account, and then repay it as a percentage of your credit card sales or other business receipts. The amount you borrow, the length of the term, and the factor rate (which is the cost of capital as there is no interest rate) are all determined by the MCA provider.

Why A Travel Agency Might Benefit From a Merchant Cash Advance

Not to get too negative here, but as a small business owner in the tourism industry, you already know that your cash flow is up against some big challenges:

  • Seasonality
  • Domestic and international crises
  • The high rate of cancellations and credit card (or debit card) chargebacks

This is before you throw in the usual small business challenges! All of the above put together mean that it’s very likely that over the course of your travel agency’s lifetime, you will need to seek out business funding of some sort.

Why Your Travel Agency Might Benefit From a Merchant Cash Advance

Maybe at the end of every season, your business needs some short-term working capital to get you through the winter (or summer). Maybe your biggest corporate client canceled their annual retreat, and you don’t have time to wait for a traditional bank loan since you need to make a big marketing push now on the inventory they just vacated. Maybe you have bad credit, and a merchant cash advance is your best option. These are just a few reasons that some business owners gravitate toward this type of funding.

Benefits of a Merchant Cash Advance

  • A short application process is the norm — usually a matter of days instead of weeks, as with traditional bank loans
  • A short funding period: You receive a lump sum of cash often within days of getting approved
  • Since you repay a percentage of your future credit card sales, the more money you make, the more of your advance you pay back
  • Merchant Cash Advance companies are more likely to take a chance on high risk business models, like some types of travel
  • Your credit history will determine your factor rate, so if you have a great credit score, you’ll do well here

Downsides of a Merchant Cash Advance

  • High costs: Your factor rate could be paying significantly higher than your typical business credit card rate. Your cost of capital will likely be higher  than you’d get from, say, a traditional loan or business line of credit
  • Additional setup fees: Not all MCA providers have them, but make sure you know exactly what you’re committing to before you sign anything
  • Unscrupulous MCA providers abound — make sure you do your research!

This last point is very important. Because merchant cash advances are not loans — they are a cash advance on anticipated future income — they are not governed by the same laws as traditional loans, lines of credit, business credit cards, and other sorts of business financing. While the best MCA providers can save your bacon, there are bad actors out there that can get you stuck in a neverending, increasing cycle of debt, potentially costing you the travel agency you’ve poured your sweat into.


Do your due diligence. Read online reviews, check the Better Business Bureau, ask around. You, your travel agency, your customers, and your credit score all deserve an MCA that works for you.

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