If you own a business and you've been looking for ways to finance it, you might have come across a financing solution that's known as a business cash advance. There are a lot of advantages you can enjoy with this option, but there are also some dangers that may appear. Thankfully, risks are present with any type of financing, and you can easily avoid these dangers. Take a moment to read everything about business cash advances and what you can do to make them work for you, with minimal risks.
It's Better To Use Business Cash Advances As A One Time Solution
A lot of the bad press surrounding financing options does not come from actual risks or inherent downsides of a loan option, but from misuse of it. It follows logically that if a loan is meant to be used in a certain way and you want it to do something else, you won't have the best experience.
In the case of business cash advances, you need to keep in mind that they are not really designed to serve as a long-term financing solution, because it would end up being quite expensive. You can avoid that situation entirely if you use a merchant cash advance the way it is intended, when you are in need of fast money!
If your business needs a quick injection of cash, not a lot of lenders will be able to help you, but a business cash advance definitely will! This financing solution is perfect for that because the process is quick and requires minimal fuss, which enables you to get your advance when you need it and put it to good use immediately!
The Provider Has 24/7 Access To Your Accounts
One of the aspects you are made aware of when applying for a business cash advance is that in order for it to be able to work the way it does, the provider requires access to your accounts. At first, that might make you a bit uncomfortable, but you will see that it's actually one of its most convenient aspects.
You see, the way you are set up to repay the money isn't in regular fixed instalments, but in a fixed percentage of your income from credit card and debit card sales. This payment is made every single day or week (depending on what you agreed on), and the provider takes the money out of your account automatically.
That is massively convenient, because it means you don't have to worry about remembering to make the repayment. In addition, the provider is aware of how much you've earned and how much you need to repay, so the situation will always be clear to both parties - you only repay according to what you earn. So, no one will shake you down for money when you've had a slow day or week.
The Situation Is A Bit Unclear In The Case Of A Default
Defaulting on a loan is, theoretically, a possibility with any loan, at any given time, simply because you never know what's going to happen. However, advances actually have quite a few provisions set in place to account for that. The way repayment is set up is meant to ensure affordability, so that defaulting never becomes a reality.
In addition, as I mentioned earlier, the access the provider has to your accounts means that they are aware of your finances at all times, and should you be unable to repay, they will know. And since you haven't put an asset up as collateral, there is no risk of losing that, either.
There is no greater danger than there is with any other loan. In fact, the risk may even be lower because of the increased affordability that is ensured with an advance. The only "risk" is the relative lack of clarity surrounding the eventuality that you should become unable to repay the money at all, but even then, there are options and payment plans that can be set up, just like with any other provider, so there is no reason for concern.
In conclusion, a business cash advance can actually be a great solution to get out of a sticky situation if you own a business that is in need of urgent capital. Like with any other financing option, there are some risks to weigh against the benefits, but they can all be avoided if you use the advance the way it's intended and are a smart, responsible owner and borrower.