A merchant cash advance (MCA) is a convenient form of short-term funding, especially for small businesses. Many small businesses turn to merchant cash advances when they’re looking for an alternative financing solution that can provide them with working capital when they need it most.
Before your business decides to get an MCA, it’s important to learn if it’s the right fit for your business needs. A merchant cash advance is not a small business loan, rather it’s a form of alternative business financing that gives small businesses a lump sum of cash in return for a percentage of their future credit or debit card receivables.
Merchant cash advances are also a more lenient form of small business financing when it comes to pre-qualification criteria, making them a great option for new businesses or those struggling with obtaining funding due to lower credit scores and other qualifying factors.
5 Ways to Utilize a Merchant Cash Advance
Financial flexibility in the form of a merchant cash advance is a great way to secure quick small business financing. Here are 5 ways you can use a merchant cash advance to improve your business.
Stock up on Inventory & New Equipment
Inventory
Merchant cash advances can be extremely useful for small businesses that have busy and slow periods throughout the year, such as restaurants, resorts, or lawn care companies. MCAs can be used to buy inventory during busy times to satisfy demand and stock up for slower periods when your business is bringing in less product.
Your business could also use funds from a merchant cash advance to expand its current inventory and bring in new products, which could help contribute to growth in your customer base.
New Equipment
Using a merchant cash advance to upgrade outdated equipment can help your business increase productivity and stay ahead of competitors. With quick approval and funding processes, MCAs are also a great option if your business needs an immediate equipment fix.
Seasonal Operations
Busy Season
Businesses that operate on a seasonal basis could benefit from small business financing options like merchant cash advances. Receiving funds from an MCA can help prepare your business for a busy season and stock up for slow seasons. However, be sure your business applies for a merchant cash advance before the start of your business’s busy season to ensure your business has the funds on hand to best maximize profits, keep up with demand, and prepare for the year ahead.
Hire Employees
If your business is experiencing growth and needs more manpower to keep up with demand, a merchant cash advance is a practical financing solution to help hire new employees. Depending on your needs, a merchant cash advance can help your business to hire employees seasonally or permanently to help your business grow and thrive.
While securing working capital to bring on new employees is great, make sure your business also has funds to pay employees during your slow seasons as well.
New opportunities
If you’re looking to expand your business or take advantage of new opportunities, a merchant cash advance can also help facilitate that.
If your business is doing well and you’re looking to open a new location to expand customer reach, but don’t have enough capital to do it on your own, an MCA is an excellent way to help grow your business’ brand.
Marketing Strategies
Small businesses can have a difficult time expanding brand awareness if they don’t have enough working capital in their budget to create new marketing strategies. Using an MCA to obtain more working capital can allow your small business to implement new marketing and advertising strategies, such as social ads or a brand update.
Taking advantage of new marketing techniques with funds from a merchant cash advance can help bring in new business and increase revenue.
New Technology
Technology is constantly advancing, and small businesses can find themselves in need of an upgrade to ensure they don’t fall behind their competition. Merchant cash advances are a great way to prepare your business to grow with evolving trends in tech.
It can be difficult to find flexibility with a tight budget. Thankfully, a merchant cash advance can provide businesses with working capital to help fund the research and development of new products.
Cashflow Assistance
With a more lenient qualification process, merchant cash advances are convenient for quick fixes when bank loans or other forms of financing may not be possible or will take too long. MCAs give businesses financial flexibility as they provide working capital to help cover current operating expenses and immediate cash flow needs.
Merchant cash advances are great for helping businesses overcome unexpected costs that reduce cash flow, such as paying rent and other bills or covering repairs, as well as helping to build up a cushion when working capital is tight.
Paying Off Debt
Paying off existing and impending debt while operating a small business can be challenging. Debt can occur from existing loans, taxes, and invoices to name a few. If payments aren’t made on time, they can increase and lead to late fees.
Obtaining alternative financing like a merchant cash advance to help pay these debts can be an excellent way to help your business stay on top of payments by providing your business with immediate cash flow to help alleviate these expenses.
Applying for a Merchant Cash Advance with Rapid Finance
Once your small business has decided to apply for a merchant cash advance, it will have to complete the application process.
At Rapid Finance, applying for small business financing is fast and convenient. You can complete the application through our online portal in just a few minutes.
Your Business Only Needs 4 Things to Apply
- A valid form of identification
- Business bank account number and routing number for deposit
- Last three months of business bank statements
- Last three credit card processing statements
Apply Online
- Click APPLY to be directed to our online portal.
Review
- Our team of trusted business advisors will carefully review your application.
Get Funded
- If approved, we’ll send the funds to the business bank account you provided.
- Be on the lookout, this happens fast!
Summary & Conclusion
Merchant cash advances are convenient ways to provide your small business with fast funding solutions for immediate short-term needs.
There are many ways a merchant cash advance can be used to help grow your business, especially as an investment to help prepare for seasonal business, take advantage of new opportunities, assist in cash flow needs, or pay off debt.
If you decide that an MCA is the best small business financing solution for your business, be sure to use this guide to help your business navigate the best way to utilize a merchant cash advance for your unique business needs.
