Advantages of Merchant Cash Advance
Creative financing solutions are popping up everywhere, and they often cater to niche markets that could stand to benefit more than others. A merchant cash advance (MCA) is one of those options: The only industries that generally qualify for an MCA are those with a high volume of credit card sales, like retail or restaurants. Still, if your business fits this model, an MCA has advantages that you probably won’t find with other financing products, especially if your sales tend to ebb and flow with the seasons or holidays.
A Smart Choice for Alternative Lending
A merchant advance might be one of the smarter choices of funding available for companies that transact mainly with credit cards. An advance does not usually require collateral, so none of your assets will be on the line, and since you use a percentage of your credit card transactions to make payments, it is almost impossible to default on the loan.
Getting approved for an advance generally requires less diligence on behalf of your lender. Hence, the paperwork tends to flow more smoothly, and the process is often completed much quicker than a conventional bank loan. So, you are receiving the cash you need faster and saving your own valuable time for other tasks, like growing your business.
Enables Your Company To Flow With Sales Trends
One business model that often excludes a company from traditional financing is seasonal sales. Even though a business may have consistent sales from year to year, the periodic fluctuations in revenue could make fixed loan payments troublesome. Using alternative funding to stock inventory ahead of the busy season or hiring temporary employees may put you in a position to fill your customers’ orders, improve your reputation and generate repeat business.
Helps You Expand With Working Capital
When your business is ready to grow, you often need to have cash in your hand to transform ideas into tangible products and services. It would be convenient if opportunities in your industry would appear only when you had the working capital to afford them, but this is rarely the case.
Applying for a merchant cash advance to support growing sales might be the ideal scenario if much of your revenue comes as credit card transactions. An increase in estimated credit card income could help your company look more appealing to potential lenders.
There might not be anything more disappointing than watching a chance to break into the next level of business pass you by because you can’t afford it. A merchant cash advance could get you the working capital you need for the growth you’ve earned.