For a business to run smoothly, it must sustain a continuous cash flow. In most cases, small businesses operate under financial constraints. In return, this deters efficient business operations. For instance, debtors may fail to pay their debts on time. Thus, to avoid inconveniences that come with such, the management may opt for a cash advance. This article will highlight some aspects relating to what is a merchant cash advance or mca and how you stand to gain from this source of finance.
Is a cash advance helpful to a business?
If you have plans to make your business successful, a cash advance can be significant. However, taking a cash advance does not guarantee that you will make the most out of it. You have to put plans into place and channel the amount of money to meaningful use. A cash advance can be channeled to any of your business activities. For instance, you can use the money to pay your staff, expand your business, and buy stock among other things.
How can a company get a cash advance?
A company can employ many ways to get a cash advance. Merchant companies can attach several of their anticipated credit cards. This will not only ensure they get a cash advance, but it will guarantee cash advance at a low interest rate. Another option is to use your account receivables as security. With this plan, you receive a cash advance. The moment your creditors pays, the factoring company receives the agreed amount.
Are there many procedures involved in taking a cash advance?
Unlike taking a loan, where you have to go through many procedures before you get your loan approved, this is not the case with a cash advance. There are no many processes involved in taking a cash advance. Also, cash advances are processed quickly. If you have a high credit score, you may consider taking a cash advance as opposed to taking a loan. The reason is simple, a high credit score, limits the loan amount granted and lengthens the loan borrowing procedure.
Flexibility in repaying
This is a key benefit of cash advance. This feature of cash advances allows small business to grow with much ease. There are no fixed terms in terms of paying the amount advanced. Some companies allow you to state how you would like to pay the amount. In other instances, if you fail to generate a stable income, the lender may allow you to pay the amount later though at a small interest.