Growing Your Business With a Merchant Cash Advance

Growing Your Business With a Merchant Cash Advance

Budgeting for the reinvestment needed to keep a small business growth can be pretty tough, especially if you are in an industry that relies on consumer demand. While your annual volume of business might be stable or even growing, it does not help if your cash flow is set up in a boom-and-bust pattern that leaves you navigating long stretches in the red between big paydays. That is where a strategy of reinvestment through the use of a merchant cash advance makes sense.

Merchant Account Cash Advance Basics

MCAs are very quick to approve and relatively easy to qualify for, provided your business is financially healthy overall. Since it is a cash advance against the earnings of your merchant account, you do need a significant income from electronic transactions to get a significant sum of capital out of the advance. If your business does not rely on credit card transactions very often, you may find another cash advance product more suited to your capital needs. The size of the advance is based on the size of your average monthly income through the merchant account, after all.

1. Use a Merchant Cash Advance for Working Capital

It takes between three days and a week for most companies to approve and then disperse cash when you apply for an MCA. So keep that in mind when timing your capital needs. When you’re facing an opportunity to take advantage of a demand spike, the MCA lets you load up on inventory, bring in extra temp staff, or even redecorate to suit the event. This lets you do more to prepare and have more on hand to sell, increasing your potential income during the high demand period.

2. Let the Boom Pay the Advance

The high demand period and its rise in sales will pay off the merchant cash advance relatively quickly as long as you’ve made good decisions about how much inventory you can move and how much stuff you need. Since the advance is paid automatically as a percentage of your merchant account income, regular sales will pay it off fast. The key to keeping this kind of financing cost-effective is getting the funding just when you need it to get ready and then make money.

3. Prepare To Repeat the Process

If everything goes well, your increased business during the high-demand period should mean a larger cash reserve during the low-demand part of your cycle. That makes it easier to keep the operation running smoothly, and it also puts you in the position to get a bigger advance based on your increased sales when that next high demand cycle hits. Over time, strategically using a merchant cash advance creates a virtuous circle of business growth. To understand how a merchant cash advance can benefit your business, contact the team at Charis Commercial Capital.


Leave a Reply