It isn't possible to run a business successfully without taking chances. There is an element of risk in many business decisions, from starting a business in the first place to everything from hiring staff to expanding inventory. Finding the funding your business needs to expand and grow also involves taking chances, even with supposedly "safe" funding solutions.

Risks of Business Funding Types

Bank loans can present great risk to business owners. Besides a years-long commitment to repay the loan, default can mean losing property or personal financial ruin. Other risks of bank loans include having the loan called suddenly if the numerous terms of the agreement, including exactly how the money will be spent, are not kept.

Other types of financing also present great risk to business owners. Crowdfunding campaigns often fail to generate enough cash due insufficient marketing or a weak message. Investors often want a significant return on their investment and may even want a say in the business. It isn't difficult to see that no type of funding is risk-proof. Even self-funding can be taking a chance on losing money that you may later need for something else.

Are Merchant Cash Advances Risky?

There is always some element of risk with any type of business funding. There is always some element of risk with any type of business funding. That being said, merchant cash advances offer a lower level of risk than other typers of business funding. Here are some reasons to take a chance with a merchant cash advance.

1. Getting a merchant cash advance has little or no impact on your credit score or rating, and you may be able to get the funding even if your credit is less than perfect, since providers rely mostly on the average sales of your business over a previous period of time, usually 6 months to a year.

2. Repayment is tied to daily income. On days your sales are lower, less money is taken out to repay the advance because the payment is a percentage of your daily sales. This practice lowers the likelihood of default, and therefore, the risk of MCAs. 

3. Without funding, your business may not grow. Often it takes money to make money. While it may seem like a risk to take a merchant cash advance, it may be a risk that pays dividends in allowing your business to move forward and gain momentum.

4. You have complete control over how to spend your money. In business, circumstances change quickly. You may need funds for a completely different reason by the time they become available, but MCA providers trust owners to make the best decisions for their businesses.

5. You can get cash fast. Other types of financing can take weeks or months to disburse funds, but merchant cash advances are fast. You could have your cash in as little as a few days to a week after applying.