When To Apply For a Merchant Cash Advance

Posted by Karen Erdelac on Aug 8, 2016

When To Apply For a Merchant Cash AdvanceMerchant cash advances have become increasingly popular option in small business lending.  Whether you’re looking for cash flow, to make improvements or expand to a second location, small business owners have grown to realize the many benefits of a merchant cash advance.  The process to be approved for a traditional bank loan is only getting more difficult.  Many businesses know they need additional funding, but aren’t sure how to go about obtaining it.  Additionally, some companies are not aware that a merchant cash advance could be available to them or when to use one.  There are many different occasions when a merchant cash advance can benefit your business.  Here are a few examples of when a merchant cash advance is your best option.

Fast Cash

In any small business, there will be times when you need money in a pinch.  For example, a necessary piece of equipment breaks down and it needs to be replaced.  Most small businesses cannot afford to close the doors.  With a merchant cash advance you can receive your funds in a far shorter time than with a bank loan, thus eliminating costly downtime.  In addition, if you’ve had a slow month and you are having difficulty making payroll, a merchant cash advance is the only way to get cash fast enough to cover it.

Small Amounts

Most banks are very hesitant to offer loans for small amounts.  In fact, anything under $200,000 can be very difficult to be approved for.  With a merchant cash advance, the threshold is much lower.  This allows you to make small repairs or improvements without having to borrow more than you need.  This prevents you from going into debt when it’s not necessary.

Quick Repay

Traditional loans can carry extremely long payment terms that can last 10 to 20 years.  These types of loans can carry heavy interest rates that compound year to year.  Sometimes you do have the option to pay them off early, however, in most cases you will incur a large fee.  With a merchant cash advance the repayment terms are significantly shorter.  A reputable merchant cash advance company wants to do what’s in the best interest of the business owner.

No Collateral

One major obstacle a small business owner come across when they apply for a bank loan is having a lack of collateral.  Owners who are just starting out are unlikely to have the collateral necessary to obtain a traditional loan.  An unsecured loan is a risk that most banks are not willing to take.  With a merchant cash advance, approval is based upon monthly credit card sales and other factors that make it unnecessary to provide collateral.

Bad Credit

When To Apply For a Merchant Cash AdvanceSince credit is not as heavily weighted in the approval process for a merchant cash advance as it is for a bank loan, those that do not have great credit still have an excellent opportunity to receive funding.  Credit scores can go south for a myriad of reasons and it does not always mean that a business had been irresponsible with their money.  Merchant cash advances take into account that fact and in most cases are able to work with owners that have low credit scores.

Opportunity

As a small business owner, you never know when a great opportunity is going to present itself.  Let’s say a prime location becomes available and it would be the perfect place to set up a second location.  Having to take the time to wait on approval from a bank can severely damage your chances of obtaining the property.  Since a merchant cash advance is much faster and easier to be approved for, this makes it a great option to investigate when you’re thinking of expanding your business.

Quikstone Capital Solutions Can Help

Once you’ve determined that you need additional funding, it’s time to decide who to go to.  Quikstone Capital Solutions has developed an excellent reputation in the small business arena and is known for helping owners maximize their potential.Apply Now

Topics: Merchant Cash Advance, Small Business