Advantages of a Merchant Cash Advance

March 23rd 2019 at 1:52pm Published by firstdownadmin

Businesses need cash to manage several day-to-day expenses. As a business owner, you cannot watch your small business grow if you don’t have adequate cash reserves at your disposal.

While cash is extremely important for success early on, it is also really hard to accumulate funds when you start a business. Most customers rely on credit sales, and this means you’ll face some liquidity issues down the line.

Regardless of the reason behind it, having limited cash reserves can lead to multiple problems. Some of the problems that you can encounter due to a negative cash balance include:

• Inability to Manage Expenses: Due to a lack of funds, you may not be able to pay your employees on time. On a similar note, you may run out of petty cash to manage small day-to-day expenses. The inability to pay for these overheads might lead you into a liquidity crunch, which is not something you would want.
• Limited Growth: You cannot experience proper growth until and unless you have proper cash reserves with you. All of your expansion plans depend upon the presence of cash within the business. The new machinery you want to buy, the new office space you want, and the assets you require can only be purchased if you have enough cash in hand. And if you don’t have adequate cash reserves, you have to live without these assets.
• Poor Liquidity: As we have mentioned above, poor liquidity is one of the problems attributed with limited cash reserves. A good way to measure your liquidity position is to calculate the cash ratio. The ratio is obtained by dividing your total cash reserves with your current liabilities. If the ratio is above 1, it means that your cash reserves exceed your liabilities and you’re in a good position. In contrast, a ratio of less than 1 indicates that you need more cash.

There are numerous other problems associated with poor cash reserves as well, but the above-mentioned issues are some of the more prominent ones.

With so much troubling you so early into the business, a merchant cash advance is your way out of the conundrum that is presented by poor liquidity. Many small businesses and enterprises have aims and objectives that cannot be achieved through small business fundings handed over by banks. Here, we’ll talk about merchant cash advances and how they can prove beneficial for you.

Benefits of Merchant Cash Advance

A merchant cash advance is one of the easiest ways to secure cash financing for your business. The advance can help you manage your expenses when your cash reserves are depleting. While most of the other options of quick finance happen to be quite complicated and time-consuming, merchant cash advance is easy as it has a secure process and a short period.

Here we mention some of the benefits that you can get through merchant cash advance:

Efficiency

In most cases, when you want an advance, you need it real quick. Not many business owners prepare for the future, which is why they are left to make quick decisions under pressure.

And when you need cash immediately, you don’t have the time to wait for the formalities that banks require or the time period that other agencies take. A merchant cash advance gives approval within hours after you initiate contact. The process is speedy and made to ensure that you have the cash reserves you require quickly.

Flexibility

Ever borrowed funding from a bank, only to realize that it comes with certain strings attached? Well, traditional bank financings do have certain strings attached to their funding. Most bank borrowings are for a specific purpose, and the money can only be used for that purpose. Such limitations can be tiring to adhere to, which is why merchant cash advances give you the flexibility to invest your money wherever you want to.

Versatility

Almost anyone can avail a merchant cash advance, regardless of the credit/debit card processor they are associated with. You can get a merchant cash advance without having to give proof of your allegiance or association with a certain account or credit union.

No Tricks

Anyone who has taken funding from a bank would agree that there are numerous complications and tricks involved in the process. Take something as simple as credit cards. There are notable features involving interest charges and other additional fees that your bank would never clarify to you beforehand.

Merchant cash advances have no such features as they are easy to invest in for almost everyone. There is nothing being hid behind the curtains, so you can proceed with full confidence and trust. Additionally, you can secure the funding without the best credit rating as well.

Approval Rating

What method do you use to check the efficacy of a commodity? Most internet users have confessed that they make a lot of their buying decisions based on the testimonials and reviews of people who have experienced the commodity before them.

Merchant cash advances have a high approval rating and are considered as a popular source of finance by many. You can also be part of the mix by getting one now.

No Fixed Payments

Fixed payments can be a hassle to maintain over an extensive period of time. You might be unable to make a single payment on time and would soon find yourself in a situation of financial crunch.  

With merchant cash advances you get the flexibility you want in paying back the funding. No fixed payment plans are expected from you, as you can pay back the amount in flexible installments.