So, you’re considering getting a merchant cash advance but you’re not sure if it is such a great idea or not.
First off, let’s talk about what a merchant cash advance is used for.
A cash advance is should be used solely for the purpose of maintaining or advancing your business. Here are some examples;
– Remodeling or expanding your place of business.
– Purchasing inventory – Particularly at volume discounts.
– Purchasing new or replacing outdated equipment.
– Enhancing your advertising and marketing efforts.
Like business loans – cash advances can be expensive. A cash advance is only a good idea if it is used to enhance your business. Here are some of the uses I have had to advise my clients against.
– Using a cash advance like a personal credit card to obtain merchandise like clothes and household items.
– Using a cash advance to pay for vacations.
– Paying down loans or credit card debt.
Basically anything that will not bring more profit to your business.
When used properly, a merchant cash advance can be a tremendously useful business tool – particularly if an opportunity comes up where you need cash quickly or if you have difficulty getting a loan from the bank.
I have been very fortunate to have seen many businesses use merchant cash advances wisely and really profit from them. Unfortunately I have also seen some of our clients misuse our service and really get themselves into hot water.
As with so many things no matter how good they are, when you misuse something it can turn against you.