Three Reasons to Consider a Merchant Cash Advance for Your Small Business

At the root of everything, the goal of any business is to keep the cash flowing. With a steady and stable cash flow, your small enterprise will be able to continue growing and retain its independence. With a consistent flow of money, you will have the freedom to continue operating your business as you see fit—from hiring the people youwant to purchase the equipment and supplies that you need. And if you do need a financing loan, a steady and stable revenue stream will help you to convince banks and other lenders that you are a safe bet.

Unfortunately, cash flow problems are a reality for many small businesses. According to a white paper report published in 2015 by Barlow Research Associates, cash flow is a monthly worry for more than 60% of small businesses. In other words, even after your business has started to grow and establish itself in the market, there is a chance that cash flow problems will continue to plague you for a long time.

Beat the Cash Flow Lulls, with a Merchant Cash Advance

Sometimes, your business will be able to get through the cash flow lulls without much issue. Perhaps the lull is bookended by periods of roaring business, like holidays or high-traffic seasons. Maybe your business can get through the lull because you don’t have any major pressing expenses—renovations, repairs, equipment replacements, etc.—that you need to cover. In any case, these lulls may not be pleasant or great for instilling confidence, but they are survivable.

During other lulls, though, you might find that cash is simply too tight for your business to make it to the other side without some assistance. Maybe a key piece of equipment breaks down, and you need to replace it, or maybe you just need to replenish your inventory. These expenses are ones that, by all accounts, can’t wait. The question is, how can your business get the cash it needs without dealing with the long processing times and low approval rates of traditional bank loans?

In such circumstances, a merchant cash advance may be a viable option for helping your business make it to the other side of a cash flow lull. If your company makes regular sales and has credit card and debit card receipts, then you are likely eligible for a merchant cash advance. This type of arrangement isn’t quite a loan—at least not in the traditional sense. Instead of getting a sum of money from the bank, a merchant cash advance involves getting an advance on your sales receipts from your merchant account provider (or the company that handles your credit card processing needs). You don’t pay back the advance in traditional terms either, but pay it based on your credit card sales. Essentially, your merchant account provider will take a fixed percentage of your daily credit card sales until the advance (plus interest) is paid back.

Why a Merchant Cash Advance Might Be the Right Option for You

Wondering whether or not the concept of a merchant cash advance might work for your business? Here are three reasons to pursue this type of cash flow fix during your next lull.

  1. You do most of your sales by credit card: If you already make most of your sales by credit card, then a merchant cash advance is the perfect form of small business financing for you. Even with sales fluctuating, you will likely be able to pay back your advance relatively quickly and without much interest, simply because you do so much business via credit card.
  2. You won’t hurt your credit: One of the core benefits of a merchant cash advance is that applying for or receiving one really doesn’t impact your credit. Merchant account providers also don’t worry much about your credit rating as a make or break criteria when considering giving you an advance. Instead, they consider your credit card sales. If you see decent numbers for your average monthly credit card sales, your merchant account provider will see that and recognize it as a sign that they will get their money back in time.
  3. You won’t have to make repayments you can’t afford: With a traditional bank loan, repayments have hard deadlines. There are specific dates that you need to make payments in particular amounts, and if you can’t fulfill those, you’ll find yourself in a tight spot. With merchant cash advances, you pay back your financing based on a percentage of your daily sales. In other words, your repayments are tied directly to your earnings. You won’t have to pay a larger percentage than you can afford.

Let your credit card receipts work for you. Consider a merchant cash advance today as an option for getting a much-needed cash influence and putting your business back on the right path.


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June 28, 2016 Three Reasons to Consider a Merchant Cash Advance for Your Small Business