Merchant Cash Advance For Small Business Purchases | Behalf

By February 24, 2016Business Financing
Man shooting a basketball - A merchant cash advance can help your business

Sometimes, the pressures of financing inventory for a small business can feel like taking the game-making shot just as the buzzer goes off. You’re running low on a product that’s in high demand and need to act quickly to restock. The time pressure weighs heavy on your shoulders and you can almost hear the the stopwatch counting down. Is a merchant cash advance the best short-term financing option for your small business?

But, as any avid basketball fan will tell you, you need to balance the risk against the reward of taking a shot in the face of pressure. After all, the effects of your actions stretch far longer than this specific game alone. What exactly would this mean for your small business?

One method for fast financing for small business purchases is taking out a merchant cash advance, but it that what’s best for your small business?

What makes merchant cash advance unique?

A merchant cash advance (MCA) works a bit differently than other business financing options. With a merchant cash advance, you’re typically offered a loan that is borrowed against your credit card receivables. This means that you give your merchant cash advance provider access to a percentage of your credit card sales every day until your advance, plus a fee, is repaid. Merchant cash advances usually aren’t cheap.

While a merchant cash advance will get you small business financing quickly, it doesn’t necessarily help the long-term growth of your company. As the Federal Reserve Bank of San Francisco reported, merchant cash advance providers can’t report to business credit bureaus. This means that your business credit score won’t rise, despite making payments on time.

A clean swish

In the past traditional merchant cash advances may have been one of the fastest ways to get funding but, with the emergence of FinTech startups, borrowers now have a range of options to get affordable business financing quickly. Prepare for the future by choosing lending options that will work with credit bureaus to raise your score. After all, if the possibility is there why not set yourself up for a swish?