When it comes to being successful in business and experiencing longevity, cash flow is key. A business could be extremely profitable and make a ton of sales, but if cash flow is hindered for whatever reason, it can put a business at risk for going under.
Cash flow is critical to paying vendors and employees, maintaining inventory, and expanding the business. It’s not uncommon for businesses to make a lot of sales and invoice their customers. But invoicing essentially puts businesses in a position to depend on timely paybacks. If consumers and vendors do not pay in a timely fashion, businesses can be stuck with inadequate cash flow, leaving them without enough money to cover their financial obligations.
When scenarios like this occur, businesses look for loan referral methods to obtain the fast cash they need to cover these expenses while they’re waiting for their invoices to be paid. The solution: a merchant cash advance.
What is a Merchant Cash Advance?
Merchant cash advances provide businesses with an alternative funding source when fast cash is needed without having to jump through hoops to get it. Even those without stellar credit or substantial collateral can still be able to secure a merchant cash advance.
These funding alternatives are not loans per se; rather, they involve the purchase of a percentage of a business’s future credit card sales at a discount. Small businesses that make a lot of their sales on credit would benefit greatly from this type of arrangement, which will provide them with a lump sum of money at the outset of the agreement. The merchant cash advance provider, in return, purchases the right to take a portion of the credit card sales every month, which usually works out to be about 8% of a business’s total receipts.
Benefits of a Merchant Cash Advance
By using a merchant cash advance, businesses can take advantage of many benefits, including:
No credit or collateral at risk. You typically don’t need to have great credit to obtain a merchant cash advance. Unlike the bank, which requires excellent credit and enforces strict lending criteria, business owners without such positive financials can still get approved.
Easy application and collections process.
There’s no need to fill out countless documents. The application process is quick, simple, and streamlined.
Quick access to cash.
Once you’ve been approved, you can usually get your hands on the cash you need within a couple of days at the most.
Payback fluctuates with your business. The amount you pay back will reflect how much you make. So, during strong sale weeks, you’ll pay more, and on slower weeks, you’ll pay less. That way, your cash flow will never be affected