With the economy at its current state, it is no surprise that an increasing number of businesses are looking for ways to save money, cut expenses, and plan for the future at the same time. While any company should be planning accordingly whether they are in a financially troubling quarter or not, the fact of the matter is that the current times have forced plenty of businesses to cut their losses and hope for the best. Before you make plans to hibernate any activity, however, you should know that there are still plenty of ways to keep your proverbial head above water.
Merchant cash advances, sometimes referred to as “business cash advances” or “cash advance loans,” are a popular alternative financing option for businesses. Merchant cash advances are a great option for businesses that need quick financial options but cannot take on additional credit obligations or have the time to wait for a loan approval.
Cash advances are “advances” of cash in exchange for future revenue or sales. Cash advance transactions are immediate and rather painless, and repayment can usually be finished within a matter of months.
Payments for merchant advances are taken directly from your daily sales. Payments are usually made in daily installments, as an automatic transfer to the cash advance provider. The payment amount can be from a few hundred dollars to a few thousand, depending on the total amount advanced to your business and also the terms of the advance.
The actual amount transferred as payment will depend on your sales and revenue numbers for the day, which is calculated after the credit card sales are totaled at the close of business. The repayment begins almost immediately after the initial cash advance.
While merchant cash advances, like payday advance loans, can carry higher rates of repayment than traditional loans, they offer quick solutions for businesses with unexpected expenses, as well as slow business seasons. Compared to regular loans and financing options, however, merchant cash advances should not be used often, as the fees can add up quickly.
If you business finds itself in need of constant cash advances, then it may be time to look into a debt management program instead. These programs do a much better job of fixing your credit score than simply paying off your dues with advances from your merchant, and they can also help you figure out a quicker way to emerge from debt.
If you merely need to make quick payments, however, or if your business suddenly sees a chance to make a profitable purchase – either for equipment, a franchise, or even a business plan – then a merchant cash advance may be a smart and efficient way to get the ball rolling early.
Remember to talk to your merchants thoroughly before you decide to take an advance, and also consult with vendors to find the best fees and rates for your needs.