Business & Investments

Article by Abhinav Poddar

When it comes to small business owners, small business cash advance can be considered amongst the many alternative merchant funding solutions. Similar to most of the financing options provided by lenders, they come with both the positives as well as the negatives. If the owner is stuck in tight credit market, he will take the funds from wherever it is available. Small business cash advance can be considered a form of receivable financing. It is mainly a targeted receivable funding, where the receivable comes from the transactions done through credit cards.

Let us check out some of the reasons why small business cash advance should get a nod from owners of small businesses, when they are looking for merchant funding solutions.

€ It helps businesses to survive, especially during recession. They can take care of the urgent bills, even if their business has been running low at that time.
€ For businesses with short-term problem related to cash flow, small business cash advance provides a considerable help.
€ If there is a need for an urgent access to fund, then small business cash advance definitely helps. You can pay it off, whenever you have funds available in your business.
€ Even though in most cases, cash advance does come with high premiums and interest rates, there are private lenders in the financial market that offer rates close to what is offered on conventional loan. In such cases, you should prefer that deal to the traditional loan offer, as the processing is faster and the money reaches your account in no time whatsoever. You can buy machines or do similar business development programs using the money in such cases and have a longer repayment plan placed.

While it has benefits, which you can avail, there are a few things, which you should be aware of before going for a small business cash advance.

€ Interest rates are very high. If taken for a longer term, there are chances that you might end up paying close to the principal amount. There are two things, which you can do, in such a scenario. Firstly, you should never take such merchant funding solutions for a longer term. Secondly, you should try to go through the market and try to find out a reasonable deal available for you.
€ In case a fixed percentage of credit card sales is taken away daily, you might not have enough amount of money to cover for your operating expenses. Over here, what you must do is to make sure that the funding amount should be close to what is needed for your business. This will assure that the daily repayment amount will be low. Again, you should also be aware of your daily earnings as well as expenses and plan the repayment accordingly to assure that you do not get stuck later on.

Small business cash advance is amongst the advantageous merchant funding solutions available out there. However, you need to take the step carefully and make sure that it does not become a problem in the longer run.

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