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Who is RapidAdvance?
Provider of merchant cash advances and other business loan products.
How popular are they?
RapidAdvance has loaned over $700 Million in capital to over 30,000 businesses.
Who Will Qualify?
You must have a credit score above 500 and at least 3 months in business, $2,500 in monthly credit card sales ($10,000 for businesses under 1 year old), and a physical business location with at least 1 year left on your lease.
Who Are They Right For?
Businesses that process credit cards and can’t get approved for other types of financing.
High risk industries, such as adult entertainment, insurance, and travel businesses.
Personal Guarantee Required?
2 business days
Where Do They Lend?
All 50 states.
How Much Do They Lend?
$5,000 to $500,000. Typically, you can qualify for 85-250 % of your monthly credit card receivables. Large loan amounts are reserved for businesses that have been operating for a longer time.
For How Long?
As long as it takes to pay back. A fixed percentage is deducted from daily credit and debit card sales to repay the advance. Most businesses take 4-12 months to pay back the advance in full.
Cost/Interests Rate of Funding Services?
The effective APR for most RapidAdvance merchant cash advances ranges from 50-80 %. Businesses with at least 3 years in operation and good credit standing can qualify for the best rates.
How Do Payments Work?
A fixed percentage is deducted from your credit card sales every business day until you pay back the advance. When business is strong, you pay more. When things are slow, you pay less.
For advances under $75K, last 4 months of bank statements, application, photo ID, a check where the funds would be deposited, and last 4 months merchant credit card processing statements. In addition to the above, tax returns and the most recent P&L statement are required for advances over $75K.
We at FitSmallBusiness.com have put a lot of time and research into business financing options, and to be completely honest, we don’t like merchant cash advances. They are very costly and can drain a business of its profits. RapidAdvance’s APR ranges from 50 to 80 % or more! Nevertheless, of all the merchant cash advance providers we came across, we thought RapidAdvance had the best product and the best customer service. This is why RapidAdvance is our recommended merchant cash advance provider.
Their product stands out because it’s relatively easy to qualify for businesses that may have no other financing option. Even startups with just 3-4 months in operation and $10,000 in monthly revenue can qualify for an advance from RapidAdvance. Moreover, RapidAdvance extends up to $500,000 in capital. Finally, RapidAdvance lets you keep your credit card processor, while other providers require you to switch.
Merchant cash advance companies often get a bad rap for being shady and nontransparent. RapidAdvance was the only provider we reviewed that responded to our questions. Mark Cerminaro, the company’s Chief Revenue Officer, told us that every client gets a dedicated account rep from the point of filing an application. If the customer would do better with a different loan product in RapidAdvance’s suite of products instead of a costly merchant cash advance, Cerminaro said that the rep would disclose that. They also offer discounted rates for customers with credit scores over 600 and more than 3 years in business. 85 % of RapidAdvance’s customers are repeat customers, speaking to their good customer service.
If you’re not familiar with merchant cash advances, review our guide.
If you’re a Square merchant, Square Capital is the least expensive merchant cash advance. PayPal Working Capital also works like a merchant cash advance and is a low-cost option for PayPal businesses.
Personal Credit Score: Minimum 500. Better rates for those with credit score over 600.
Years in Business: At least 3 months, though you must be in business for longer to qualify for larger loan amounts.
Revenues: You should have at least $2,500 in monthly credit card receivables. Based on our own estimates, you would have to make around $82/day on average in credit card sales to qualify for a $5,000 advance from RapidAdvance.
Industry Exclusions: None.
Other Qualifications: Only brick-and-mortar businesses can qualify, and you have to have at least 1 year left on your lease.
Collateral Required? No.
Does the advance require a personal guarantee – From who? No. If you default on the advance, it looks like RapidAdvance cannot come after your personal assets. However, we recommend looking carefully at the financing agreement, as you should with any loan.
Upfront Fees: None.
Servicing Fees: None.
Other Fees: Based on figures provided to us by RapidAdvance, we calculated that RapidAdvance has a factor rate around 1.20. The factor rate tells you how much you owe RapidAdvance. For example, if you take a $10,000 advance, you will have to pay RapidAdvance $12,000 back from future card sales.
Are interest rates variable? No.
How an Advance is Structured with RapidAdvance
Three things make up the cost of a RapidAdvance loan:
- Advance – This is the principal, the amount of money you borrow from RapidAdvance.
- Fee/Factor Rate – The fee for a merchant cash advance is described as a factor rate. RapidAdvance currently charges a factor rate of approximately 1.20. Multiply your advance by the factor rate to get the total amount of money that you owe. For example, you have to repay $120,000 if you borrow $100,000 through RapidAdvance. This amount is fixed at the outset based on estimates of your future credit card sales and doesn’t change regardless of how long it takes to pay back RapidAdvance.
- Portion of Future Card Sales (aka Retrieval Rate) – You must turn over a fixed percentage of your daily credit card sales to RapidAdvance to repay the advance. This percentage is called the retrieval rate. According to RapidAdvance, their average retrieval rate is 20 % though this varies based on the creditworthiness of the borrower and the amount of money that’s advanced. Say you qualify for a $100,000 advance and the average 20 % retrieval rate. If you make $3000 in sales one day, RapidAdvance will take $600 that day towards repaying your advance. If you have a bad day and make no sales, your payment resumes on the next day that you have sales. The payments continue until you pay back the entire amount you owe.
Cerminaro mentioned that in no event would RapidAdvance charge a retrieval rate that would take more than 8-10 % of a business’ monthly sales revenue. This ensures that the business can keep profiting while paying off the advance.
APR of a RapidAdvance Merchant Cash Advance
Annual Percentage Rate (APR) is a popular way to express the cost of financing. If you’ve purchased a home or a car, you may have heard of your interest rate quoted as an APR. APR takes all fees into account and tells you the cost of a loan over one year.
Having the APR makes it easier to compare RapidAdvance with other merchant cash advances and loan products. Based on the average retrieval rate and average monthly interest rates charged by RapidAdvance, we calculated the APR to range from 50-80 %. The APR will vary based on your credit card sales and the length of time it takes you to pay back the advance. Most merchants pay back the advance within 12 months. If your credit card sales aren’t that high and RapidAdvance expects you to take more than a year to pay back the advance, they will increase the factor rate at the outset. That, in turn, will result in a higher APR.
An APR of 50-80 % isn’t surprising for a merchant cash advance. That’s actually cheaper than what competitor CAN Capital charges — its APR can reach triple digits. For an ‘affordable’ merchant cash advance, Square Capital is really the only option. It has an APR around 35 %, but it is only open to merchants that process credit card payments on Square. Other options less expensive than a cash advance include short-term loans, P2P loans, and non-profit loans. Each of these types of financing has its own qualification criteria.
To find out how much you qualify for, you must complete the online application and provide some basic information. You will receive a quote from a RapidAdvance account executive who will review your funding options. Typically, RapidAdvance processes all paperwork and completes all verifications and credit reviews the same day that you submit your application. The typical customer is funded within 5 business days of submitting the application, but it can be as fast as 1 day. The speed depends on things like your availability for an interview and whether you have all the necessary documents at hand.
What documents need to be provided? For advances under $75K, last 4 months of bank statements, application, photo ID, a check where the funds would be deposited, and last 4 months merchant credit card processing statements. In addition to the above, tax returns and the most recent P&L statement are required for advances over $75K.
Do they need online access to any systems – Quickbooks, PayPal, bank accounts? No, but you can submit documents electronically.
Is there a credit report pull? If so at what point in the process? Yes. Your credit rating is pulled once you submit your initial application.
Which credit reporting agency does RapidAdvance use? Unknown.
Does RapidAdvance report to the credit bureaus? No.
Advance Sizes and Terms
What is the minimum / maximum time I can borrow capital? You can take as long as you need to to pay back the advance, but most merchants pay back the advance within 4-12 months.
What is the minimum / maximum amount of available capital? RapidAdvance extends between $5,000 to $500,000 in capital.
Since we know the typical payback period (within 12 months), average factor rate (1.2 times advance amount), and the average retrieval rate (20 %), we can estimate how much you might be able to borrow through RapidAdvance based on your daily credit card sales. Note that these are our own estimates based on the raw data we were provided, but RapidAdvance hasn’t provided or confirmed these numbers:
Payment Methods & Schedule
- Schedule of Payments: A fixed portion of your credit card sales (20%) is automatically deducted every business day.
- Payment Initiation: RapidAdvance automatically takes its percentage at the close of each business day.
- Method Of Payment: ACH.
- Penalties For Missing Payments: Not applicable. If you don’t make sales on a particular day, your payments resume on the next day that you make sales. When your business is doing well, you pay more; when business slows down, you pay less.
- What happens on pre-payment? The amount of money you owe doesn’t change, regardless of how long it takes to repay RapidAdvance.
US-based or International? US-based. RapidAdvance is located in Bethesda, MD.
Support hours: Phone support for RapidAdvance customers is available Monday – Friday 9 am – 6 pm EST.
Other Lending Products:
Need some money for your business? Click here to get our FREE Guide:
How to Get a Small Business Loan.
The Bottom Line
RapidAdvance has a pretty good merchant cash advance product for businesses that can’t qualify for other types of financing. Brick-and-mortar businesses that have been in business for at least 3 months, have credit card receivables of $2,500/month, and have a credit score above 500 can qualify. It’s a convenient method of obtaining capital because repayment is tied to your daily credit card sales. However, we advise you to do your research and find out if you’ll qualify for lower-cost financing before taking a merchant cash advance.