When you have finally decided to launch your own start up firm, you were already aware of the possible scenarios to avoid making bad decisions. But keeping your small business afloat is just as important for any company, especially for those that are new to their preferred niche. A cash-strapped economy may discourage you to hold on tightly to your resources, making sure every penny you spend is a worthwhile investment.
However, this should not be a hindrance in realizing that your business may still thrive despite a volatile business environment. Certain solutions such as a business cash advancehelp small business owners acquire additional funding to cover expenses on different areas, including equipment upgrades, product or service improvements, and expansion projects. Also known as a merchant cash advance, business cash advances are a perfect alternative of funding sources amid tighter bank policies on corporate and business lending qualifications.
Before jumping in to acquire business cash advances, being familiar of their nature and purpose should be a priority among start up companies. Merchant cash advance providers belong to a relatively huge market. The advent of the business cash advance industry in the U.S. only happened in the late 1990s, but the number of companies involved in merchant cash advances have grown significantly in recent years.
One of the reasons behind their burgeoning growth has to do with a difficult time in gaining credit, which substantially increases the demand for quick access to business capital. A certain arrangement included in this type of cash advance deals with providers offering small business owners with the flexibility of paying the borrowed amount through a percentage of future revenue.
Restaurants, retail stores and service-oriented businesses are the ones that usually seek merchant cash advances. Leonard C. Wright, who is a “Money Doctor” contributor for the American Institute of CPAs, suggests that business cash advances provide a convenient way for start ups to fund their projects, but owners should realize the potential costs of the advance given the high level of interest rates compared to standard loans.
The benefits of cash advance for businesses are seen as the main selling points in luring small companies to apply for one. Planning to get a business cash advance has been popular in recent years due to the absence of collateral loss or credit rating risks.
Applying for a business cash advance is fairly easy as well. The process of passing requirements is normally a simple task, which is in contrast to a tedious approval process for traditional loans. Business cash advance providers also have few criteria requirements in providing funding to clients. For instance, they usually gauge business health and revenue flow for the screening of applications.
While business cash advances may seem a popular choice, maintaining a smooth operational workflow for your small business still depends on other important factors, including industry knowledge and market familiarity. Start up companies should be aware that business cash advances are only a complementary solution and not a universal answer to all business concerns.