Starting a small business takes a lot time, energy, and cash flow. Regardless of how great a business idea you may have, one of the main reasons that so many small businesses fail is due to a lack of consistent cash flow. However, with lending options like merchant cash advances, more entrepreneurs are able to keep their businesses running and eventually start turning a profit.
Understanding Merchant Cash Advances
Cash flow is essential to every business. You need money to actually start a company and will need even more cash to make sure it keeps running. While most business owners want to rely on their profits alone to fund their companies, this isn’t always an option. That’s where merchant cash advances come in.
Merchant cash advances are loans that act as short-term financing options for small businesses that need cash immediately. These advances, along with their fees, must be repaid within a period of 6 – 12 months. As part of the repayment process, borrowers must make credit card transactions on a daily basis, making it one of the simplest options for financing.
Repayment via Credit Card Transactions
Most small businesses accept credit cards from business customers and individual consumers. Whatever your small business may be, it’s likely that you already make credit card transactions on a regular basis. While you may already have considered applying for a traditional loan, this conventional lending process is slower with fewer guarantees that you will be granted your loan.
Businesses that need money quickly find that merchant cash advances are a viable solution. In most cases, borrowers will be approved within 24 hours. They will be able to have the cash in hand within 72 hours. The amount you can borrow will depend on the amount of credit card transactions your business processes.
With no need for collateral, good credit, or personal guarantees, you’ll find merchant cash advances to be the ideal solution to any financial challenges. Interested in making merchant cash advances work for you? Keep reading to learn how an MCA will help improve your cash flow.
1. Meet Any Short-Term Financial Needs
With merchant cash advances, you’ll be able to take care of any financial needs that may come up. Whether you have impending bills or an emergency problem that needs to be fixed as soon as possible, a merchant cash advance is the ideal solution for these types of short-term financial issues.
With credit by way of a merchant cash advance, you’ll get the money you need quickly while still being able to carry on with business as usual. This way, you’ll be able to avoid damaging your brand’s reputation or having to keep customers, employees, or suppliers waiting.
2. Fill Predictable Gaps
Many businesses often go through gaps with their cash flow. Though these predictable periods are normal for many companies, these gaps make it harder to carry on with the daily operations of one’s business.
With merchant cash advances, companies can fill in these gaps with the capital from the loan. This type of borrowing is an essential part of many business’ financial management strategies.
3. Take Advantage of Opportunities
You can’t control what opportunities come your way. Sometimes, there are certain deals that are too good to pass up. If you see an opportunity to grow your business but don’t have the capital to do so, you can use a merchant cash advance to make sure you can still take advantage of these circumstances.
If you wait until you’ve saved up enough cash, it’s likely the opportunity will be gone. Instead, working capital loans like merchant cash advances allow you to capitalize on every opportunity that comes your way.
Cash comes and goes, but it doesn’t always come in as fast as you need it to. Regardless of how well you budget, save, and how many sales you make, there will always be situations where having a little more cash would really help. Be sure to keep this guide in mind when considering your financing options for your small business.