Running a business can be stressful with cash flow worries, but you might be able to take the pressure off with a merchant cash advance. Here’s why it can be great for your business. It’s a much over used statistic that half of all start-ups will end up with business failure due to cash flow within their first two years. What receives slightly less attention is that many of those which fail will do so despite being relatively successful. Business is good, their product is selling and yet they still go to the wall. The unfortunate truth about business today is that a short-term cash flow crisis can kill even a robust business.
How Can It Help Business Cash Flow
Managing the finances of a business is always a fine balancing act. You must keep the money coming in and ensure you can meet all your financial obligations. The problems come if something interrupts your short-term planning for some reason. Take this example of a construction company which specialises in delivering large scale projects.
Each of these projects requires a significant amount of investment at the beginning but they only get paid at the end. If payment for one project is delayed, they could find themselves unable to cover their basic expenses.
This is the kind of scenario that keeps business owners awake at night, but there are ways around it. One of the simplest could be merchant cash advances. This is essentially a lump sum payment taken out on future credit and debit card sales. A provider will make a payment in return for a percentage of your future credit or debit card income.
The lender will take a look at your past credit card sales and use them to base their offer. This might typically focus on the average monthly sales volume. You can then hand over a percentage of your card sales every month until the final amount is paid off.
These business Business Cash Flow Loan are a perfect fit for businesses that use card payment terminals to take payment from customers.
Benefits which help your Business Cash Flow:
- Overcoming short-term cashflow challenges: if you hit rocky financial waters, for any reason, this could provide a quick cash injection to ensure all urgent costs are met.
- Make investments:If you lack the upfront capital for an investment in your business, this could give you the boost you need.
- Reduce stress: As an entrepreneur, stress can have an enormous impact on your health and wellbeing. This can take the pressure off just a little bit, stop you worrying about bills and give you some breathing space to think about more profitable areas of your business.
- Quick and easy: Applying is much quicker than most bank loans because there isn’t quite as much paperwork involved. Once approved payments can also be made quickly and could be in your account within a week.
- Bad credit isn’t a problem: Cash advances work in a slightly different way to regular business loans. Because they are based on historic sales volume, they rely less on credit ratings. Many people who can’t access a business loan would be able to secure a merchant cash advance.
- No impact on credit:There’s no impact on your credit rating in the way you might expect from a bank loan. That’s because this isn’t a loan in the conventional sense. You’re simply being advanced money on the basis of future sales.
- Low risk:There’s no need to put up collateral such as your home or other assets.
- Flexible repayments: Your repayments are based on a percentage of your sales. So, if your sales fall, so will your repayments. It’s a more flexible payment structure which fits in with your ability to repay.
- No restrictions on use: You can use this lump sum payment in any way you want – whether it’s to buy infrastructure, pay bills or meet any other short-term obligation.
Merchant Cash Advance is a Perfect Fit
A merchant cash advance will be more suitable for some businesses than others. It’s likely to be most valuable if your business takes a sizeable amount of revenue through credit and debit card payments. Lenders base their decisions on this data rather than your total sales. If your revenue comes from another source, you might want to choose another options such as invoice finance or lending.
However, this can be a relatively simple, way to inject some capital into your business. It can overcome any short-term emergencies and make life as a business owner a whole lot less stressful.
If you feel a merchant cash advance can support your business cash flow, please complete the online enquiry.