How A Merchant Cash Advance Can Deliver You From A Financial Pinch

Merchants find themselves in need of funding for various reasons. It could be to buy inventory, expand a business, marketing, and advertising, and so on. Sometimes, however, we’re motivated to seek additional capital to rescue our businesses from financial turmoil, especially when our options are almost cut and dried.

A cash advance is often the last thing merchants want to hear when they’re wallowing in debt. It’s rarely considered a good idea to borrow money to pay off borrowed money. Nonetheless, if you have a steady business, a cash advance could be the winning card on your table.

Thinking of a loan?

If you’re in a fix, getting a loan is among the few choices you have. But if you think you can easily walk into a bank and request for funding with a heavy debt weighing down your credit score, you’re mistaken. Banks only hand out money when you can convince them you’re able to pay back the loan. Otherwise, you’ll be nothing more than an avoidable risk.

But let’s say, by chance, you get the loan. You can fix the finance problem you had, but you’ve just committed to making payments every month, regardless of how much your business makes. And when you can’t make the installments, you’ll be back to where you started, or worse, further down.

Why a cash advance?

A merchant cash advance is a funding alternative to a business loan, where instead of making large repayments at the end of the month, you can pay small amounts every day until you settle the debt. This solution particularly works for merchants with steady sales.

If you have a pressing need for cash and your sales are steady, an advance provider is a better alternative to a bank. Because the financier will rarely ask for long credit descriptions, merely sales records, the application process will be quick and easy.

Moreover, unlike bank loans, which can take up to five weeks to be approved, renown merchant funding companies pass applications in record time. First American Merchant, for example, is known to deposit advances in less than a day.

Interest Rates

An apparent downside to going the cash advance way is high-interest rates. Providers typically charge more because of the risk they have to incur to lend money to a borrower, based solely on the current state of their business.

However, the quick funding, added to the convenience of making small payments with daily credit card sales somehow makes the rates bearable to a merchant in need.

If you’re in dire need for operational capital, a cash advance can come in handy. It’s easy to apply for, it gets you the money fast, and paying is manageable. That said, an advance is still a debt, and like any other, you should take it seriously.