Whether you’re thinking about a business cash advance for your small business or avoiding it altogether, there are several things to consider before taking one. These include how easy they are to access, whether or not they’re a long-term financial solution, and how much they cost.
Easy to Access
Whether you want to expand your business or need extra cash to get through the next busy season, business cash advance is a great option. They are easier to obtain than a traditional business loan and can quickly provide the cash you need.
Many small businesses find that they have a tough time paying operating expenses. This is especially true if they are using credit cards for trade. While these cards may be convenient, they make it easy to rack up debt.
For this reason, consider all options available before making a decision.
Merchant cash advances are ideal for younger businesses that still need to establish credit. They can be used to purchase inventory in bulk, hire new employees, build infrastructure, and more.
Fast to Fund
Obtaining a business cash advance can be a lifesaver for your business. Unlike a loan, a business cash advance allows you to borrow against future income. This will enable you to resolve sudden costs, pay for vandalism, or capitalize on new opportunities.
Business cash advances are funded much faster than other forms of financing. The application process is simple and takes just a few minutes. You can get approved in just a few days.
There are also various lenders, so you should compare them before choosing one.
Merchant cash advances are popular with small businesses such as eateries, retailers, and restaurants. The advantage of this type of financing is that it is flexible and easy to access. In addition, it can help you prepare for the busy season.
Need Help Building Credit
Despite what many people may think, there are better ways to build your business credit than cash advances. While they can help you get cash quickly, they come with very high-interest rates and burden your cash flow.
Unlike a loan, merchant cash advances are not reported to business credit bureaus.
Consequently, your credit score will not be impacted. However, these advances are also not eligible for other financing options. For example, lenders may require you to purchase hardware before you can secure financing. They may also need a merchant account before you are approved.
Moreover, merchant cash advances come with high-interest rates. For instance, a low factor rate may cost around 35%. However, a high factor rate may cost up to 200% APR. Because of these high-interest rates, you may end up with more debt than you can manage.
Not a Long-Term Financial Solution
Whether you have a new business or an existing business that needs some extra cash, there are several ways to fund it. Of course, some of these methods require a substantial credit check, but there are also more affordable alternatives. These alternatives may even be available from online lenders. For example, a business cash advance is an excellent way to fund a new venture. The money is in your bank account within a few days and is paid back relatively quickly.
Getting a small business loan is not for the faint of heart, but it can be a lifesaver. These loans are generally given in lump sums and come with a fixed payment schedule over a predefined period. This financing can benefit those having trouble getting approved for a traditional bank loan.