Short-term loans typically appeal to retailers because they’re easy to get. For instance, getting a two-week loan from PayPal only demands a small amount of paperwork and a manageable servicing fee. The money is deposited into your account almost immediately, and you can fulfill your needs quickly.

However, things start to go south when two weeks pass by, and your business still hasn’t recovered well enough to pay off the loan. What are your options?

You could take the road more travelled and pay the servicing fee again to extend the loan for another two weeks, but you have to be certain you’ll pay the full amount before the new term is up, or risk losing more money in servicing fees. On the other hand, if the light at the end of your tunnel is still miles away, you can opt for alternative funding.

Taking a loan to pay off another loan – is this a good idea?

Short-term loans can be a malignant headache, and to avoid recurring fees, you should service them as soon as you get the means. That said, it is not a good idea to rush for another short-period loan to pay off past debts. Instead, if your credit score allows it, go for a larger loan with a longer repayment time. You can then settle your short-term debt, and invest the rest of the money into the business.

But if you can’t qualify for a larger loan, either because of bad credit or the nature of your business, your best bet lies with getting a cash advance from an independent financial firm.

Using a cash advance to service your short-term loan

If you’re running a modern-day business, you are probably already accepting credit card payments, and can, therefore, qualify for a cash advance. Smart merchants prefer cash advances to short-term loans because they’re much easier to pay. Unlike a loan, which demands repayment in full at the end of a given period, cash advances are serviced by small percentages of your daily credit card sales.

Applying for an advance from a leading provider like First American Merchant is easy and straightforward, and approval is a near-guarantee regardless of your credit score. And after you use the funds to pay off your original debtors, you can concentrate on growing your sales, increasing daily revenue and building your business, without the worry of having a loan to pay.

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