How to Maximize ROI from a Merchant Cash Advance

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Friday, November 17th, 2017

Whether you need a capital infusion to cover a seasonal cash flow shortfall, want to expand into a new area, have decided that it’s time to stop dreaming of a renovation and actually make it happen — or any other reason — the fact remains that you want to get the most value from a merchant cash advance. To that end, here are 3 ways to maximize your ROI:

  • Know how much you need to borrow.

Borrowing too little means that you’ll need to urgently raise more capital when you’re busy doing other things, which can be costly, risky and stressful. On the other side of the spectrum, borrowing too much means that you’ll have dead money sitting (or rather, dying) in your account.

Obviously, you don’t have a crystal ball, and even the most robust prediction can be off-the-mark, since unexpected opportunities can arise. However, you want to do your homework and have a firm grasp of what your short and long-term spending needs are, and their relative rank on the priority list. Generally speaking, you’re probably better off aiming towards a more conservative amount than one that could be excessive.

  • Pay close attention to scheduling.

A merchant cash advance takes far less time to get approved/funded than conventional bank loans. For example, here at National Business Capital we review applications within one business day, and upon approval we typically transfer funds within a week.

However, in the business world time is always of the essence, which means that you want to ensure that capital is ready and available for when you need it. For example, if you run a restaurant and the traditional busy season starts in early November and runs through to the end of the year, it’s wise to get your funding locked down in August or September, so that you can make purchases and/or add new hires ahead of the demand surge.

  • Leverage the merchant cash advance to improve your credit score.  

A merchant cash advance isn’t technically a loan. As the term implies, it’s an advance on future sales. That’s why no credit check is required — which means that if you have bad credit, you’ll still probably get fast approval. This is not the case whatsoever with banks, where bad credit (personal and/or business) is typically a deal-breaker.  

However, even though credit bureaus aren’t involved in assessing a merchant cash advance application, if you have bad credit then you can certainly leverage the funding to improve your score in a few ways to strengthen your overall financial profile:

  • Get current or pay off current small business loans.
  • Pay down the amount drawn on a business line of credit.
  • Get current with vendors and suppliers.

Remember: at National Business Capital, we do not impose ANY limitations or restrictions on how you can spend or invest your funds. We believe that you — and not us — are in the best position to know what your business needs to succeed and thrive.

Learn More

To learn more about maximizing your ROI from a merchant cash advance, contact the National Business Capital team today or fill out our two minute application. Your consultation with us is free, and we can work with you to customize a multi-product funding solution (e.g. merchant cash advance + business line of credit) that fits your goals, provides flexibility, and minimizes your total cost of borrowing.

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