Earlier, we discussed our consultative approach in the merchant cash advance industry and gave an example of a situation where a merchant cash advance may not be the right fit as a financing solution for a business. This leads us into the logical follow-up question, “What is the best circumstance for a merchant cash advance?”
The best use of a merchant cash advance is for a profitable business to take advantage of an opportunity to invest in the growth of its business. The business owners reading this know that it takes a lot of hard work to start and grow your business, but it also takes capital. This is where we can help. Whether it’s a new location, a brand new look for the store, additional equipment, or more inventory for the store, these initiatives are crucial to the growth and success of a business but require capital to execute. The Canadian banks, which are heavily focused on collateral, business and credit history, and personal net worth are often unwilling to help small businesses in financing these growth capital investments. Assuming the business’s current operations are profitable to support the cash advance program (as per our last post), a merchant cash advance is the answer! In these cases, the merchant cash advance fee is minor in comparison to the lost of opportunity of not being able to invest in these initiatives. Another circumstance that we, and the merchant cash advance industry in general, advertise is using a cash advance for emergency purposes, such as tax payments. Our view is that this is fine, as long as the operations are profitable and the emergency requirement is truly a temporary, one-time event. If a restaurant’s dishwasher broke and they need to buy a new one quickly, this is clearly a temporary issue, and our ability to act faster than the bank is very valuable in this circumstance. On behalf of everyone at Merchant Advance Capital we wish everyone a great long weekend!