Merchant Cash Advance Fast

7 Insider tips to find the right Merchant Cash Advance

A merchant cash advance is often a funding “lifesaver”.  It can be fast, convenient and available even if you have poor credit.  It can also create a repayment nightmare … unless you know the nasty potential “gotcha’s” before you take the money.

Two small business questions for you today.  One … Does your business take credit cards on a regular basis?  And Two … Do you need cash to expand or even survive?

The answer for most small companies is yes to both.  This is particularly true for most small retail stores and independently owned restaurants.  Most retailers are “mom-pop” shops, two-partner businesses or one owner operations.  So are small restaurants.  Raising funds is often a difficult distraction for any small company.

If you need cash, a merchant cash advance or business cash advance may be a solution.  Finding short term money is an absolute must to help make it through the typical money crunches that are part of entrepreneurial life.  A merchant cash advance is based on your recent average credit card sales.

That’s where a “yes” answer to question one can help solve the cash crunch crisis from question two.  The problem used to be:  “How do you quickly raise the funds you need?”  Bank loans have always been tough to get and they take too long in a cash emergency.  You also usually needed collateral and your credit score problems made traditional loans an impossible fantasy.  Today, the bank crisis has made any loan virtually impossible.

Thankfully, merchant cash advances have become available in the last several years.  The new challenge is finding a reputable company that will give you the terms you need.  The cash advance industry is unregulated … You need to know or learn a few key “insider” tips before you sign on the dotted line and grab a cash advance.

Here are my top 7 Insider Tips:

1. Only take the money you absolutely need!  Cash advances are expensive.  You will typically pay back 30-50% PLUS the advance.  If your advance is $10,000 you will pay back $13,000 to $15,000 depending on term and risk factors.
2. Watch the “Holdback” or reserve!  Never obligate your business to pay back more than 25% of daily credit card sales.
3. Watch your Payback to Gross ratio!  Never take an advance more than 18% of your gross monthly sales.
4. Do Not sign a Personal Guarantee!  Good cash advance companies do not ask you to sign personally.
5. Don’t be fooled by “Come-On” or low initial payback rates.  All funders will underwrite your application before they give you a final rate.  Don’t sign final papers UNTIL you know all the terms.
6. Watch out for “points” or high closing costs.  The good companies have no points and very low fees.  Consider all costs before signing for your advance.
7. Try not to take a new advance before your old advance is paid off.  The new advance will “compound” the amount you have to pay back.  For example … let’s say your first advance is $10,000 to pay back $14,000.  You are initially paying $4,000 to net you $10,000.  If you get a new advance of $10,000 when your first balance is $6,000 … at the same payback rate ($14,000), you are now paying back another $4,000 for only an extra $4,000.  That is incredibly expensive money.

The bottom line is a merchant cash advance is a relatively easy source of funds when you MUST raise cash fast.  However, keep the 7 cash advance tips in mind as you talk to Cash Advance companies. 

Ideally, try to work with a company that works with several merchant cash funding sources.  That way you will be able to choose the best rates and terms for your business.

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