How Does Alternative Funding Benefit Small Business Owners?

Posted by Karen Erdelac on Jan 17, 2018

How Does Alternative Funding Benefit Small Business Owners?Many alternative lenders have come under fire for deceptive practices, but it is important to remember there are bad apples in every industry. What receives less publicity is the tremendous growth being sparked by reputable lenders. Merchant cash advances are not loans in the traditional sense. Instead, the provider is purchasing a portion of the business's future sales. The fee, which is usually about 20 to 25 percent of the amount, seems high. But consider a loan from a traditional bank, which is usually paid back over a period of 5 to 10 years or more, with interest compounded every year. At 8 percent interest per year, that money costs the business owner 30 to 60 percent of the amount they borrowed. Strictly based on finance charges along, merchant cash advances shine when compared with traditional bank loans. So what else do MCA’s offer small business owners? 

Credit Protection

Besides getting the money they need when they need it, there are other benefits for businesses that use this type of financing. Because no credit check is required or accessed, the business owner's credit rating is protected. The merchant cash advance is paid back through small daily withdrawals that are automatic, so there is no chance of forgetting to send a payment and having that damage your credit, either.

Steady Cash Flow

Instead of having to wait until the bank balance is sufficient to pay the month's bills, using a merchant cash advance can give your business the stability it needs to pay its obligations in a timely manner. Having more steady cash flow can lead to less stress and better decision making for the business owner when the pressure of a low bank balance is removed. It also allows you to take advantage of time sensitive opportunities such as seasonal inventory purchases.

No Collateral Required

Most traditional forms of financing require some sort of assets or collateral to secure the loan. Many businesses don't have any collateral, especially in the early years, and those who do, may not want to risk it if they don't have to. Merchant cash advances don't require the collateral that loans do, after all, it is not a loan but is based on future receipts.

Spending Flexibility

How Does Alternative Funding Benefit Small Business Owners?Traditional loans and many other types of financing like crowdfunding often require borrowers to specify exactly how the money borrowed will be spent. Using the money differently can trigger consequences, even immediate repayment of the loan. Merchant cash advances allow the business to use the money as they see fit. This is an advantage because in business, things can change rapidly. What you needed money for a month ago may not be what you need money for now. Business cash advances give you the flexibility to adapt to changing circumstances.

Ability To Pivot Quickly

Having extra cash on hand can mean the difference between being able to expand when the opportunity presents itself and being stuck in a slow growth or no growth position until you can get ahead financially. Sometimes you need an influx of working capital to be able to grow, and a merchant cash advance can provide this influx.

With over 12 years in the business, Quikstone Capital Solutions has proven to be a trustworthy and knowledgeable lender specializing in small business funding. Over 60% of our clients are renewals looking to continuously grow their business. Whether you need cash for emergencies, cash to cover unexpected costs, or if you’re looking to make long overdue improvements, Quikstone Capital can help.Apply Now

Topics: Merchant Cash Advance