What are Business Cash Advances and what are the best options for my company? The number of companies using a business cash advance is growing, but what is it, how does it work and is it the best option for your business? Access to finance is a critical issue for businesses of all kinds. Ever since the financial crisis, banks have been reluctant to lend money. The options if a business needs a short-term injection of cash can become quite limited, which leaves businesses looking around for options. One of the best option’s are business cash advances.
What are business cash advances?
Business cash advances effectively allows you to borrow against your future card sales. Providers only look at the amount of revenue you receive through your credit and debit card sales. They will advance a lump sum based on past performance which you can put to any use you like.
They recoup their money by taking a cut of your future revenue until the sum has been paid off. In good times, when card sales are busy, you’ll pay it off more quickly, and in slower times, your payments will decline making everything a little more manageable.
Why use a business cash advance in the UK
There are many ways you might want to use a business cash advance in the UK. It could be a good way to give yourself a cushion when you’re coming into a fallow period. Many businesses in the UK will be seasonal and can experience peaks and troughs. Like squirrels preparing for winter, they will be looking to build capital during the busy periods in order to see them through the quieter times. If they can’t, for any reason, it might be difficult to get through winter. A merchant cash advance UK can keep you in business until better times swing around.
You might also use it for more positive reasons such as investing in business improvements. We live in a fast-paced digital world and, if you’re not moving forward, you’ll be heading backwards quickly. You need to innovate to survive, but that takes money. You may use the capital from a business cash advance to invest in new infrastructure equipment or people. This means that, even if you don’t have much money in your account, you can still capitalise on developments which can move your business forward.
The best alternative option to loans
One of the biggest attractions for small businesses is the thought of using a different option in place of business loans. If you have a poor credit history, you might not qualify for a small business loan. There may well be some providers who will specifically offer loans for companies with a bad credit history. However, these can be expensive and may do nothing other than force you deeper and deeper into debt.
A business cash advance is quicker and lighter on the paperwork. Because this is an advance, the provider will not need to know as much about you as your bank. They can process the money and have it in your account on the same day.
Business types that can use the best advance
The cash advance for business works best for companies in the UK that take card payments. A card payment terminal is requested for the cash advance. Merchant cash advances for pubs, Merchant cash advances for MOT Centres, Merchant cash advances for hairdressers, Merchant cash advances for retailers. this list is endless to the types of business that this finance product can support.
Getting hi tech
We are also seeing some of the best business cash advances providers getting ready for the digital future. Two companies, Swift Payments and Bitty Advance are pairing up to offer a virtual merchant cash advance service. This provides users with instant access to virtual funds after they have secured a business cash advance. These funds can then be paid into a mobile wallet such as Apple Pay.
Are they worth the money?
Of course, there is one drawback: money. The best business cash advances will inevitably cost money. You’ll be paying a daily retrieval rate until the money is paid off and you’ll also have to pay fees. These may vary from provider to provider so it is important to shop around and secure the best deal possible.
Ultimately, the question revolves around whether or not you will receive a decent return on investment. The answer depends on how you use it. A good way to use a merchant cash advance is to inject working capital into an otherwise healthy business which is running into a cashflow brick wall. In this situation you only need to stay afloat until business picks up.
However, if the fundamentals of your business are not quite as strong, you could simply be postponing the inevitable. An advance may squeak you through this crisis, but you may find yourself facing another, bigger one, before long. If that’s the case you could be throwing good money after bad.
A merchant cash advance, then, is a lot like any other financial product. Whether it is value for money or not will depend to a large extent on how you use it.
Get the cash flowing
If you feel business cash advances can support your business, the best way to get started is simply complete the online enquiry. Once its received a funding expert will contact you.