Getting a merchant advance

5 Things To Consider Before Getting A Merchant Cash Advance

Getting business funding is serious business, and at times, it can make or break your company. When choosing to get a merchant cash advance, a smart business owner will think about all the ramifications that this decision will have on them. A merchant cash advance is a huge decision to make, and it’s important to remember that. Before you sign on a dotted line, make sure that you have thought out the following things.


Can you handle the interest rate with your current profit margins?


There are occasions in which a company’s profit margins simply can’t handle the prospect of actually having a large percentage of sales being sold off at a discount. If your business can’t handle the interest rate that the cash advance would have, you simply should not consider it as an option.

Luckily, interest rates can vary greatly from lender to lender, so if you felt one rate was too high, another company may be able to offer you a better term. 


What are you going to spend that money on?


If you are wise, you already know what you will spend that advance on. Otherwise, you’re basically just asking for money for no real reason. If you don’t know what you want to spend your advance on, you’re best off simply working towards building a better business.


Is it necessary?


There are times when you could be able to use the profits of your company to further your business within a reasonable timeframe. This can make the act of a merchant cash advance unnecessary, which in turn could save you a lot of money in the long and short run. However, if it’s really wise to get a loan in a short timeframe, a cash advance may be the most necessary thing in your situation.


Can you do the same things with less money?


A major mistake that people make when choosing to get a merchant cash advance is to try to get more money than they actually need. Regardless of how much money you want to have advanced, you will end up having to pay it back. In order to make sure that you’re not indebted for too long, it’s best to trim the fat off your plans and make it as affordable as possible.


Why a merchant advance?


Depending on your situation, a merchant cash advance may not be the best business funding option for you. For example, if you want to have over $500,000 given to you, a merchant advance will never be able to cover it. You will need to look at angel investors or small business loans for that. If it’s a matter of being rejected by banks, or if it’s a matter of wanting to see the money as soon as possible, then a merchant advance may be the best option for you. It’s best to read up on the perks and pitfalls of cash advances before you make a decision.

Though we love being able to offer merchant advances, what we really like seeing is businesses taking flight. If you feel like a merchant advance isn’t the best decision for you, then listen to yourself. After all, we can’t always make those decisions for you.


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About Capital Key

At Capital Key our team simply loves helping our clients get money so they can grow their business! In todays economy it can be very frustrating for a small business owner that has a great business plan and vision, but cannot get the money needed to put everything into action. We help make the process of getting approved for business capital easy and fast.

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