The nightmare scenario of entrepreneurs doesn't usually begin with nagging worries that your business might not make it. You usually start out brimming with confidence. Your ideas are sound, your business model carefully prepared. If all goes according to plan, you will grow, gain a loyal following, and give value to your customers while you change your own standard of living for the better. But everything does not go according to plan. Your nightmare starts with an unexpected breakdown or setback, leaving you near ruin just when you were ready to take off.
Every business has been in a position of needing fast funding. Sometimes this comes early in your development, and others with an unexpected crisis. If you need fast funding for a critical need, a merchant cash advance can quickly and easily solve your problem. This is not a solution to every cash flow issue you have, but it can give your business a lift when you really need it.
Pro: Fast Access to Funds
A merchant cash advance comes without the red tape you experience with traditional loans. As a result, you can gain access to funds very quickly. In a true financial emergency, this can make the difference between staying afloat and closing your doors. You may not have time to go through all of the paperwork and delay of a traditional loan, which can take weeks or even months to finish. In those moments, access to this kind of funding can deliver in one or two days on a vital need, allowing you to keep going and even sleep at night.
Pro: Easier Qualification
The speedy process to gain access to a merchant cash advance comes with another important benefit: you can receive funds without having great credit or collateral to put up. For new businesses in particular, it can be frustrating to have a great business concept but not enough money up front. Your ideas can be good enough to change your circumstances for the better, but you need cash before you can put them into motion. A cash advance can help you bridge those gaps and lift yourself up.
Pro: Flexible Repayment
With traditional lending, you have to repay a loan in fixed installments over time. Those terms might come with lower interest, but they also depend on what the lender thinks you should be able to pay back based on your credit profile and your ability to post valuable collateral. If business is slow, your payment can be harder to make than when everything is booming. The result is that financial difficulties that made the loan necessary only get worse. A merchant cash advance bases your payment on your actual cash flow. Often times your payment can be set as a set percentage of your receipts. The more you make, the more quickly you can repay it, but the slower months lower the payment as well. Basing your payment on your actual historical performance makes a cash advance more manageable than the more traditional lending options.
Con: Only a Temporary Solution
You should never think of merchant cash advances as a long-term solution to your funding needs. It comes with higher finance charges than traditional loans, and a shorter term for repayment. As such, you should think of it not as a capital solution for your business so much as a tool to provide immediate cash to meet an immediate need. You should plan to pay off these loans quickly, and use them at times of critical need rather than as a default for raising capital.
Con: Not Right for Every Situation
Similarly, there are times that other financing options should come first. When you are raising capital to establish your business, more traditional lending options might take longer but cost less in the long run. Merchant cash advances deliver quick cash when you need it, but they should come into play when you will be able to repay the money with regular cash flow, rather than when you are developing your foundation.
Should You Get a Merchant Cash Advance?
At Kenmore Capital, we pride ourselves on delivering business customers the financial products they need to succeed. Your business works differently from what others do, and your needs will vary based on all the factors that make you unique in the market. With that in mind, a merchant cash advance tailored to the specific nuances of your business can help you meet an immediate need when it comes up.
Kenmore Capital serves people, not numbers. If you need a merchant cash advance, we will help connect you to the money you need, when you need it and how you need it. If another financial product will help you more, we will work with you to identify the best option for you. Contact us today to learn more about how we can help serve your business' financial needs.