A merchant cash advance is a last chance grasp for a business, as the banking industry has turned its back on the rest of the country. When this country crashed from its real estate issues, the banking industry turned to the government for assistance to stay alive and now that they are steady, they have turned their backs on the public. The very people that gave them their money to stay in business and now the public came up with other solutions. Necessity being the mother of invention and so….. We invented.
Cash Advance for merchants
Merchants get a lump sum amount of money and the cash advance business gets a percentage of their daily credit card and debit card transactions. Most companies that do this are on the up and up, but as with any business, the sharks are also circling. So be careful when choosing a company.
The rule of thumb
This industry is self- policed and orderly. If they kill your business, they die too. So, they try to ask no more than nine percent of the sales. With smaller businesses, they go as low as 1%. It just depends on your sales. If you have a slow month, so do they.
Their interest rates are considerably higher than anywhere else and this is not for everyone. You as the business owner, have many things to consider. Like, with their daily take on the sales, how will this affect the overall cash flow of the business? With 9% going out the door on a daily basis, can you survive? Weigh these questions heavily before you rush for the influx of their cash. Even though it is no more than nine percent daily, look at how much that is overall on the advance and make sure you know what it adds up to per month. Can you survive that? The equivalent interest rates run from 60% to 200%. Look heavily before you settle.
This came about to help businesses survive during a difficult time and without it, many would not have made it. We have a tendency to create things when the chips are down. And on both spectrums, this is a good and a bad thing. Some businesses can’t make it happen without the advance and others simply won’t survive with it in their business plan.
Areas of growth
Research shows that this industry has only just begun. Its potential for growth is astronomical with the market just tickling the service at ten percent. It’s worth being $5 billion to $10 billion. Imagine what the banking industry could be pulling in if they decided to adjust their terms. Maybe they would be just as lucrative as this cash advance giants.
Maybe just maybe, they will get the hint that they are needed. In the meantime, something else has been created in their place. For now it is unregulated, except by a few volunteers that want to see it grow rationally. So, when looking for a merchant cash advance, do your math and calculate whether this will work or not for the business that you are growing.