When times are tough it can mean your business is in danger. It is even worse when you see many of the large corporations that have been around for more than fifty years begin to close their doors or ask for handouts. Business owners have to be realistic and cut their losses when things are turning towards bankruptcy or at least closure; however, you may be able to save your company depending on the financial condition it is in.
There are products called merchant cash advances, which have been designed as an alternative to loans. A standard bank loan takes at least a month if not three to obtain. They cannot help in an emergency situation unless you have already worked towards obtaining the loan. Furthermore, most banks are unwilling to lend money if you are too high a risk especially right now. Even with more funding for small businesses at banks, there are strict parameters you must meet.
Given all of these negatives, it makes sense that you would want funding that is easy to obtain and that can get you through a difficult period in your business. Merchant loans do have to be paid back with a daily percentage; however, these companies also realize there are slow periods where you may have less money coming in.
Businesses are often seasonal where holidays and vacation periods tend to produce more sales. Not all businesses rely on seasons, but chances are it will have some effect. You know when your slow periods are therefore you can get funding to move you through this time.
Some things you should know about merchant cash advances include:
- Your last six months of credit card sales will determine what the lender is willing to give you.
- The company buys future credit cards sales based on Visa and MasterCard.
- There is a fee for this process and a percentage of daily sales is taken out during the processing stage. The rest of the sales are sent along to your bank account.
Merchant loans are not true loans as they are not regulated like a bank, which is why they can be easier to obtain.