When it comes to funding a small business, there are a variety of ways to obtain growth capital and financing for other necessary business expenses. One way that has become more popular in recent years is called a cash advance.
It’s important to understand what a cash advance is, and is not. For starters, it’s not a loan. With a loan, you pay an application fee and the lender runs your credit check, a background check, and undertakes other due diligence measures to assess your lending risk. Typically, the amount you are allowed to borrow is based on that due diligence, so you may not get the cash that you need. Plus, applying for and being approved for a loan can take several days or weeks. It might not help you achieve your goals.
A cash advance, on the other hand, is an advance money vehicle that allows you to gain access to future money you will earn in exchange for a benefit to the cash advance provider. Cash can be advanced for personal reasons–for instance, to pay for unforeseen medical expenses–and repaid with future salary or employment earnings. A large number of cash advances, however, are used to handle business expenses for a variety of small business types.
The Benefits of a Cash Advance for Businesses
There are all sorts of reasons a business may need to seek out a cash advance. You may need to fund an expansion, hire more employees to handle growing demand, buy new equipment to replace old equipment that is failing or to add to your production volumes, or to acquire real estate or other business units. These are just to name a few.
Your cash advance provider is going to want to know some things about you and your business. For instance, what do you plan to use the money for? They’ll also want to run a credit check, but other details may be more important for approval your cash advance. A solid financial position, for instance, may take precedence.
If you are approved for your cash advance, you can receive your business funding in at little as 24 hours. The advance money can improve your business’s cash flow by allowing you to make essential purchases so you can stay in business longer, get through a slow period, or to grow and expand more easily. You can often receive an advance of up to $1 million. Of course, you don’t want to take more than you need, but you want to receive as much as you can to achieve your business goals.
Apply For a Cash Advance When It’s Right for Your Business
How do you know when you need a cash advance? Be prudent and look ahead 3-6 months. What’s in store for your business? Will you be opening a new store? Will you need new equipment? Does your current sales volume allow you to be confident in your cash flow position at the time when you’ll need to make your new investment? If not, then you should consider a cash advance.
You don’t have to apply for it right away. You can wait until you need it, but do put in some advance planning. A cash advance can pull a failing business up and take a successful business higher!