There comes a time — even several times — in the life of every business where cash flow temporarily stops flowing, and it becomes necessary to get a business cash advance. Or on the other side of the spectrum, profitable limited-time opportunities can arise unexpectedly, and once again a business cash advance makes strategic sense. We’ll explore some of these possibilities in a moment. First, let’s clarify what a business cash advance is — and what it isn’t.
What Is a Business Cash Advance?
A business cash advance technically isn’t a business loan, or a business line of credit. It’s an advance on future sales — typically, credit and debit transactions. For this reason, business cash advances are also called merchant cash advances (and this is the term we use here at National Business Capital).
How Does a Business Cash Advance Work?
Businesses that receive a business cash advance agree to remit a small fixed percentage future credit and debit card sales, until the advance (principal plus accrued interest) is paid in full. The payment is made at the end of each business day, and handled automatically.
One of the most beneficial aspects of a business cash advance is that, as noted above, the repayment amount is dynamic rather than static (as is typically the case with a working capital loan). As such, if sales on a particular day are above average, a little bit more is allocated to the loan — which moves the needle closer to full repayment. Alternatively, if sales on a particular day are slower-than-normal, borrowers have more funds available on-hand to boost sales and get back on-track.
How to Best Use a Business Cash Advance
At National Business Capital, we don’t impose restrictions or rules on how our customers can spend their business cash advance. This isn’t because we don’t take an interest in their success. Rather, it’s because we firmly believe that our customers — rather than us — are in the best position to make smart, timely and strategic spending allocation decisions. Indeed, perhaps the only thing worse than a back seat driver is a back seat lender!
With this being said, we are available to our customers 24/7/365 to answer questions and provide guidance, suggestions and advice. To that end, here are some of the ways that our customers nationwide are using their business cash advance to drive their business forward:
- Purchase new equipment
- Purchase new inventory
- Hire new staff (including temporary/seasonal staff)
- Cover facility or building repairs, renovations or upgrades
- Implementing new technology (e.g. software, telecommunications, mobile devices, etc.).
- Launching marketing and advertising campaigns
Again, these are just some of the ways that a business cash advance can be used to help bridge a temporary cash flow shortfall, or exploit a profitable and limited time opportunity.
To learn more about a business cash advance, contact us today. Or if you’ve decided that this is the right financing option for your business, start your secure online application now. It only takes a few minutes, and we’ll be in touch within 24 hours with a decision. Unlike banks, we don’t require great credit or collateral, and we approve about 90 percent of applications.