If you’re looking to grow or improve your business, you’re going to need some cash to get you to where you want to be. Small businesses may not have the funds built up to make these vital changes – this is where cash advances come in. These loans are developed specifically for business owners and can be used to fund anything you need for your company. A merchant cash advance is beneficial for many reasons and is gaining popularity amongst smaller businesses. Below, we’ll take a look at how a cash advance could be helpful for you.
What is a cash advance?
A cash advance is commonly used in small businesses and is a way for a company to borrow money against income that they make through future sales. The advances are not repaid at a fixed rate over a fixed period of time like other business loans, it is simply an advance that a company pays back with a percentage of sales they make in the future. One of the great things about cash advances is that they don’t count towards businesses incurring debt, as well as not having to pay an interest rate or APR. Below, we’ll look at some of the benefits of a cash advance.
A fast solution
These cash advances provide a quick and easy way of accessing money when you need it most. It is different from loans that tend to have a long application and approval period, which is what makes them stand out from the rest – it is likely that you will receive the funds you’ve applied for in your bank account in a few days. This is advantageous if you need funds quickly, whether that’s for a critical repair or you need a new piece of equipment your business can’t function without. A cash advance means that you can receive funds easily and in a timely manner.
When it comes to cash advances, there are no long approval applications. Two of the most important factors that can have an impact on whether your advance is approved, rely on how your business processes sales, for example, you must take debit and credit cards so that you can pay back a percentage of your advance. You may also find that these cash advances are only offered to businesses that have been operating for over 6 months – so if both of the above apply to you, then you’re likely to be approved for a cash advance.
There are a few other factors that cash advance lenders may look at when you apply, such as your companies bank statements over the last few months, to help give them an idea of how regular your credit card sales are, as well as looking at the risk level of the industry of your business, and what percentage of your sales and transactions are taken with credit cards.
Cash advances can come in all amounts, so can be a great option if you’re looking for a larger advance or just something small to cover an unexpected cost. There are no regulations with regards to what you can use your advance for. You can use it to grow or improve your business, for example, adding new equipment or giving your premises a fresh, new look to increase footfall. Thanks to the range in amounts you can choose, and the ways that you can use them, cash advances are becoming more popular with businesses today.
Making repayments is easy with a cash advance. As previously mentioned, lenders take a percentage of the amount owed from credit card payments made to the business through sales. They will also suggest a preferred card machine to use so that at the end of each day, a percentage can be taken off overall credit card transactions to pay towards your advance.
You can manage your payments easily and track how much you have left to pay off. Cash advances can be a good option for businesses that do not have good credit, as they are based on business performance, rather than credit scores – so if your credit card sales are consistent, lenders will see that you’re able to pay back your cash advance.