So a certain aspect of your business requires working capital . Now, what are your business funding options? Well, this question depends entirely on what you need that funding for? Let’s say you want to start up a brand new business. Here your best bet is private equity, friends, and family or bank finance. On the other hand, if you are an existing retail business (older than 12 months) you probably qualify for a Merchant Cash Advance. This is an unsecured funding product that uses card terminals to process repayments. If your company operates outside of the retail sector (say construction or logistics) you could benefit from bank finance, an overdraft, or a secured loan as you will have existing assets, which qualify as collateral.
Not all merchant business funding options are created equal. Some prescribe what the funding should be used for. Others don’t. We fall into the latter half of the equation. We understand that no one knows your business the way you do. So we give you Carte Blanche when it comes to fund allocation. Many merchants use the Cash Advance to buy stock, often in bulk. Qualifying them for a big discount- this saving alone justifies the cost of the funding,
This all depends on the type of funding and associated repayment terms. Equity see the site investors for example, will require a share of ownership in order to invest. Therefore, the value of this share will increase as your business grows. The cost of a traditional loan will be based on an interest rate and could fluctuate based on external factors. This means that the amount you owe is unfixed and may cost you more than expected. A Merchant Capital Cash Advance uses a fixed cost of funding that is agreed at the outset and never changes.
One of the drawcards of a Cash Advance is that it doesn’t require collateral against funding. Other finance products do. The same type of funding from another cash provider may require you to put up a property as collateral while the other doesn’t. If you are using the finance to buy a property they might use it as collateral against the funding. This means that if you default, the property would be at risk.
How do I know which business loan I should get?
Business funding options all depend on what you need and when you need it. A short-term loan like a Merchant Cash Advance is best used for business-enhancing activities like renovations, stock purchases, or partner buy-outs. It could even be used to buy a new property (not necessarily the property it’s already on) although we can do that too. A long-term loan would allow you to purchase property outright or can be used as a business loan for a new business. These may take longer to start turning a profit. So here a traditional bank loan (paid over 5-10 years) may be the better option.
How long will it take me to pay it off?
Again, this all comes down to the terms of the agreement. A working capital loan (like an overdraft or Cash Advance) is usually a short-term option. This is a quick cash injection that affords the opportunity to grow your business and make you money. This should be paid off in less than 12 months. Longer-term investments (like purchasing a property) will take time to pay off. This is to alleviate pressure on the business. These types of loans can take years to repay but they often allow you to purchase large assets that can appreciate in value. But it is really important you understand exactly how long it will take to pay off your funding before you sign on the bottom line.
There is no shortage of business funding options out there. But now you know where to look and what questions to ask. For more information on obtaining a Merchant Capital Cash Advance in less than 48 hours, contact us today