Acquiring the funding you need to grow your business can be a difficult and nerve-wracking experience. Bank loans require a lengthy approval process with many different requirements. Alternative lenders can speed that process up, but there are risks when dealing with a relatively unknown entity. Working with a reputable merchant cash advance lender can make this experience much more palatable and allow you to focus on business growth. Here we explore some of the risks and benefits associated with a merchant cash advance.
Risk: Inability To Repay
Merchant cash advance providers use different criteria to disburse business cash than banks and other funding sources. The criteria they use, gross credit card receipts for the previous 6 to 12 months, ensures that businesses will be able to repay their obligations.
Benefit: Flexible Repayment
If the business slows down, the amount paid each day also goes down, unlike fixed payments that may deprive a business of needed working capital. This flexibility ensures that businesses will be able to repay, even if it takes a little longer than expected, and there are no penalties if this happens, because it's built into the plan.
Risk: Paying Too Much
There are fees associated with merchant cash advances, and those fees may at first seem higher than those paid for bank loans and other types of financing. However, considering that bank loans have compounded interest over a number of years, the fees paid for merchant cash advances are likely to be the same or lower than the total interest paid with bank loans.
Benefit: Faster Repayment
Instead of a bank loan with payments lingering on for years, merchant cash advances are repaid within 3 to 12 months. The discipline developed by these quick repayments benefits the business going forward and can propel rapid increases in profit or the ability to improve the business by reinvesting.
Risk: Dealing With A Dishonest Company
Several accountability groups have been created in recent years to police MCA providers, and those who used less than honorable practices were forced out of business years ago. Do your due diligence by checking with the Better Business Bureau and fully discuss all terms before signing any documents.
Benefit: Business Autonomy
Unlike bank loans, merchant cash advance providers don't put any restrictions on how you can use your cash advance. If your needs change, you can adjust your spending as you see fit. It's your business, and MCAs help you stay in control of how the business is run.
Risk: Borrowing Too Much
MCA companies like Quikstone Capital Solutions have guidelines in place to prevent businesses from getting more cash than they can reasonably afford when fees are included. MCAs from Quikstone Capital Solutions can be used to finance projects that generate revenue so that the business can benefit from the cash received, even after fees are paid.
Benefit: A Funding Partner
Quikstone Capital Solutions works with businesses to find solutions that will benefit everyone, especially your business. As a Better Business Bureau accredited member, Quikstone Capital Solutions will be a reliable funding partner for your business.
If your business needs cash to take it to the next level, apply for a merchant cash advance with Quikstone Capital Solutions today and get your business on the road to greater success.
