How can you fund your small business with a cash advance?

Você pode financiar sua pequena empresa com um adiantamento em dinheiro usando factoring, crédito em parcelas fixas ou empréstimo com garantia. Factoring é vender seus recebíveis a prazo para uma empresa que lhe paga à vista, descontando uma taxa. Crédito em parcelas fixas é um empréstimo do Mercado Pago, que varia conforme suas vendas. Você paga em parcelas fixas mensais, com juros a partir de 1,99% ao mês. Empréstimo com garantia é um crédito em que você oferece um bem como garantia de pagamento. Você pode conseguir juros mais baixos e prazos mais longos.

A cash advance or more commonly known as a Merchant Cash Advance (MCAs) is a quick way for a business to get capital. The alternative lending industry has been built on the MCA product however a MCA is not right for all small businesses. That is also why it is incredibly important to work with a business loan broker that is familiar with multiple lending products. A good loan brokers role should be to match a client to a particular funding option that fits the clients business model and cash flow model best. Loan brokers that only focus on MCA funding will slowly disappear if they do not innovate.

A cash advance can get a business funding very quickly. It is especially useful for a business that might have credit challenges or revenue challenges that would prevent them from getting funding from more traditional routes.

It’s a good way to finance your business/ inventory. This is short term. Helps businesses with not a good credit history nor collateral. Good way also to build your credit score.

It depends on the circumstances too. To fund a specific project it may well be that the funding cost can be passed on through pricing. It also depends whether the need is a short term or long term financial plan.

The cons of a cash advance depends on the circumstances. I've consulted with business that had been stacked multiple cash advances by fraudulent brokers. Just like any other funding option or anything in life there is a time and place for a cash advance. not all businesses should be given one especially if they can qualify for more traditional options. What bothers me most about people and regulators looking to scrutinize cash advances further is that they do not understand the clients have no other options. So before anyone says a cash advance is a terrible idea and should be made illegal my question to you is "What is you solution to help a business that can't get funding anywhere else?"

I recently reviewed a cash advance facility for a business. They were charged a factor rate of 1.4 and were getting the advance for 120 days or 4 months. This is eye watering when you consider you are repaying 40% extra over 120 days. That equates to over 120% per annum. If it is short term funding for a specific purpose that allows the business to achieve a certain goal then it may be appropriate. As an ongoing source of working capital I just don't see how this is viable for most businesses.

I am guessing that most businesses that use this type of funding don't have many alternatives. I recently looked at a business that was paying very high rates on a cash advance facility. They had plant and machinery that can be refinanced. The refinance would generate more cash than the cash advance facility. It also reduced monthly outgoings by ￡20,000 p.m. and reduced interest costs from 120% p.a. to 14% p.a. If you are able to sell on credit terms to business customers an invoice finance facility may be a viable alternative. I think the reality is that most businesses that use these facilities are retailers or restaurants with poor financial that have no viable alternatives.

I have found these are helpful for the various businesses I started: Think in terms of how many services I need to do to cover the cost. Is the expense needed or a desire that can be obtained later? Have one designated business credit card that you pay off every month or make more than the minimum payment till you zero it out. From each payment put 10% in savings for a rainy day or emergency. I have used my savings to start a few home businesses and the secret payment I made to myself was to repay it with interest. It was a better deal than paying fees to the bank or a credit card. * If your credit score is good some institutions have a Line Of Credit Account your pay off at a very low interest fee.