Merchant Cash Advance Blog

Merchant Cash Advances: The Best Source of Working Capital in Business

   Thursday, 17 August 2017 10:41 PBC Blog

Merchant Cash AdvancesThe Best Source of Working Capital in Business

Working capital is an inevitable requirement for any business owner, irrespective of the size of the enterprise. When we talk about working capital, we are usually talking about the funds that are needed to run the daily operations of a business. Unless you are extremely wealthy and capable of personally bootstrapping your business, then you must secure some source of funding for your working capital.  


Sources of working capital in business


Your working capital can be secured from a wide array of sources, whether spontaneous, short-term or long-term. Some of the common sources of working capital include loans from financial institutions including banks, credit from your suppliers, and the proceeds generated from sales made.  

Popular sources of working capital will require that you secure the funding against some assets and that you provide a long and strong credit history. Failure to meet such requirements would mean automatic disqualification and even if you meet all the requirements, you might still be denied the funding.

However, there is one exceptional source of working capital which is fairly easy, quick, and effective:


Merchant Cash Advances


The method of securing working capital in business through merchant cash advances is comparatively new. Merchant cash advances are not loans as such, but rather a form of advance grounded on the future credit sales and revenues of your business. You can only use a MCA to secure working capital if you accept credit and debit card payments.  

Here are some of the reasons why you should consider a merchant cash advance over other methods of securing working capital:


i.    Irrespective of the size of your business, you can apply for a merchant cash advance and have the money processed into your account fairly easily and fast. Providers of MCAs evaluate the risks of the advance by reviewing your credit card receipts and daily receivables to determine your ability to pay back on time.


ii.    Working capital obtained from MCAs can be used for a wide range of purposes, especially the day to day operations of your business.


iii.    No collateral required to secure working capital from MCA,


iv.    Repayment is fully based on your sales, meaning that you will automatically pay if you make credit or debit card sales, without adhering to any particular maturity date.


Although the terms of securing working capital from MCAs are reasonably attractive, you should consider the following issues before committing to this type of financing:


i.    MCA is not a loan and therefore does not build up the credit record of your business.


ii.    The interest rates of MCAs are higher than those of small loans and might therefore prove more expensive in the long-run.


iii.    Working capital in business derived from MCAs is based on plastic sales. Therefore if your business is new and you have not established a strong customer base, you might not be able to secure funding in this manner.


Merchant cash advances are among the best methods of securing working capital in business. Do not let your business falter because of poor credit rating or rejection by financial institutions, just establish a respectable level of credit card transactions every day and you can easily get funding for your working capital from a MCA.

 

We provide two highly accessible financing programs that can get your business the working capital it needs in days instead of months.

For a small business, obtaining a traditional loan today is a complex and difficult process. That’s where Premier Business Capital comes in. 

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