How To Come Out Ahead With a Merchant Cash Advance
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How To Come Out Ahead With a Merchant Cash Advance


As the popularity of alternative funding continues to increase, so does the budding interest and curiosity surrounding it.  No group seems to be more curious than small business owners.  With traditional lenders turning a cold shoulder to small advancements and those who lack personal collateral, there have been few funding places to turn to…until now.

Increasing popularity on the alternative funding path is the merchant cash advance.  What is it?  More important, what is the risk?  And even more important, how can it you handle it in a way that allows you to come out ahead?  Read on for those answers and more.

How To Come Out Ahead With a Merchant Cash Advance

Understand the Small Business Value

Unlike traditional loans, a merchant cash advance (also known as a business cash advance) provides immediate, unsecured funds to a merchant by selling off a future portion of their credit/debit card sales.  Also different from traditional funding, the process is designed to be swift and seamless.  Personal collateral and perfect credit are not required to obtain an MCA.

For a small business owner this type of alternative funding can be a big help when the unexpected pops up.  What if a necessary piece of equipment suddenly breaks?  What if damage from a storm impedes your sales?  The small business owner has very little room to sit and wait for traditional funding to come around, and the MCA is ready to help with most funds being awarded in as little as five business days.

Make the Right Investment

While the “savior” aspect of a merchant cash advance rings true, your best bet to coming out ahead is to implement one into your already thriving business.  Don’t use an MCA as a bailout method or as a way to keep yourself afloat for just a few more months.  Even though the funds are awarded to you differently than traditional lenders, one thing remains universal: they must be paid back.  Specifically, most MCAs are fulfilled anywhere between six and twelve months.

The best method is to view the MCA as an investment, a way to put in and get back more from your small business.  Best uses include making renovations, stocking up on inventory, implementing new hires or a fresh marketing campaign.  If you want to come out ahead with an MCA, then use the funds in a way that will enrich your overall effort and profitability.

Ask Until You Understand

Just because the funding within a merchant cash advance is swift, doesn’t mean your decision process should be.  Make sure you take the time to learn and understand all of the terms you are committing to.  Ask to see fees upfront and ask questions until your every curiosity has been satisfied.

Keep in mind that you won’t have to establish a fixed payment schedule with an MCA.  Instead, the loan is repaid automatically by taking a fixed percentage of your daily credit/debit card sales with each nightly batch.  Make sure this type of repayment process makes sense for the flow of your specific business.

Know Your Lender

As the popularity of MCAs increase, so does the competition.  Each day new “lending experts” are popping; be sure you know who you are dealing with.  Research viable lenders and check up on their reputations with credible sources like the BBB.

Only work with lenders that put your best interest first, that are not pushy and that don’t encourage you to take more than you really need.   And, if you can find a lender that is familiar with your industry, even better.

When it comes to finding the right lender for you and your small business, the more you educate yourself the better decision you’ll make.  Happy funding!

What other tips do you have for coming out ahead with a merchant cash advance?


About the Author:

Kelly Gregorio writes about small business topics while working at Advantage Capital Funds, a provider of merchant cash advances. You can read her daily business blog here.

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