How to Get a Cash Advance for Small Businesses | Behalf

By December 30, 2016Merchant Cash Advance
how to get a cash advance

Cash advances are everywhere you look. Over the years, cash has become increasingly accessible. Traditional bank loans, with their high rejection rates and long application processes, have become less attractive to small businesses, driving up the demand for cash advances. Many financial firms have risen to fill the demand, whether it be credit card companies, fintechs or alternative lenders. Across the board, they offer cash advances as a fast and easy alternative for businesses in need of funding.

Cash advances vary from lender to lender; some resemble a line of credit, while others resemble a loan. Consequently, not all cash advances are equal. Let’s just say it only takes a few bad apples to spoil the bunch, but when it comes to cash advances there are A LOT of bad apples. Don’t let that discourage you from getting your business the financing it needs. On the search for the right cash advance, the key is quality not quantity.

You can access cash advances simply by going to the ATM and using your credit card, applying online, or talking to a lender. Learning how to get a cash advance is easy; the challenge is finding the right one. At first, you may feel overwhelmed with all of the cash advance options at your fingertips. Don’t fret! This article is a guide on how to get a cash advance that’s right for your business:

Step 1) Identify Your Business Needs

First things first, why do you want a cash advance? Make sure you have a good reason. Regardless of what cash advance you go with, it will cost you. If your business is already struggling to make ends meet, a cash advance may only make matters worse. Find out what the underlying cause is behind your business’ financial woes. If your business is hemorrhaging cash, a cash advance may only bring your company temporary relief.

Identifying your business needs will allow you to plan accordingly and devise the best way to put your cash advance to use. Set a goal that aims to improve your business performance and strengthen it. All too often, bad cash advances leave your business weaker than it was from the start. Whether good or bad, cash advances are not something you want to make a habit; they are a one and done business fail-safe. A cash advance is a short term financing option so it is critical that you get the most out of it while you can. Your business should come out financially stronger on the other side.

Step 2) Decide What Type of Cash Advance Best Meets Your Business Needs

At this point, you have a better sense of what your business needs are and you want to find a cash advance that helps you fulfill them. There are many types of cash advances out there. Here is a breakdown of the most common cash advances:

  • Payday Cash Advance: A smaller cash advance option is a payday cash advance. It is a short term loan that is typically due by your following payday. Considering the size of the advance, this option may be better for personal use, as opposed to business use.
  • Credit Card Cash Advance: You can access this advance through your credit card company. Most credit cards now give you the option to withdraw cash at an ATM or through a check against your credit card. The terms are typically included in your credit card agreement and the fees are notoriously steep.
  • Merchant cash advance: An MCA is an advance that goes against future sales. A percentage is taken from subsequent sales until the full amount of the MCA is paid off. These advances can look like loans or lines of credit, be large or small. These types of cash advances are an ideal short term financing solution for healthy small businesses that experience the occasional cash flow gap or want to cushion their capital reserves.
  • Quick-start advance: This cash advance is for businesses that are getting started with little to no credit. These advances tend to be small in size because of the lack of the borrower’s credit history. This is a risky option but it works best with young companies expecting to generate a high amount of revenue fast.

Step 3) Choose a Cash Advance Lender

Choosing a cash advance lender is the most important part of the process, so take your time and choose wisely. The right lender offers cash advances that are fair and gentle on your business. Avoid predatory lenders that attach to your business like a leech, draining your capital reserve with exorbitant fees and weakening your bottom line. Most cash advance lenders use the same catchy ads and offers to pull you in, so how do you choose the right one? You can weed out the real from the fake, by asking the right questions. Here are some features you should focus on when shopping around for the right cash advance: Advance fees, hidden fees, interest rates, terms, grace periods, deadlines, and convenience. If the cash advance lender does not provide this information initially, ask for it. Pay attention to their response: if they are hesitant to share the details of their cash advance look elsewhere; this is a major red flag. High interest rates and hidden fees tend to be the cash advance norm, but there are more affordable financial solutions that break the mold with transparent and flexible terms.

Step 4) Apply to Get a Cash Advance

Depending on your lender, you can apply in-store or online. In-store applications can take a while to process, but online applications are quick and easy. Ask in advance if your application could affect your credit score. Whether or not your credit history plays a significant role in the approval process, is contingent on which type of cash advance you choose and your cash advance lender.

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