If you are considering a small business cash advance, you might be wondering what it takes to be approved. You’ll be surprised at how relatively easy it is. Since it isn’t a loan, you don’t need to include endless reams of paperwork to prove your financial position and creditworthiness. That’s not to say that you don’t need any proof at all.
Here are three steps any small business can take to get approved for a cash advance:
- First, make sure you have enough receivables coming in to justify the advance. Many small business owners want funding but have no receivables to prove they have income, or potential revenues. You’ll increase your chances at getting a cash advance for your business if you go out and get some customers first. Make sure you’ll have enough business to live on after you’ve established payment terms for your cash advance. To do that take your total receivables, subtract your payment for your cash advance, and make sure that amount is higher than your expenses.
- Establish a cash advance plan. Before you apply for your cash advance, make sure you know what you are going to do with the money. Are you going to hire more employees? Are you going to buy equipment? Will you open up new locations or expand your current office? Develop your plan for the advance and don’t use the money for anything else. By following your plan, you are more likely to succeed in your business and pay your advance back according to the terms you set with the funding entity.
- Apply for the advance. When you find a financier who is willing to take a chance on your business, make sure you get your application in as fast as you can. The sooner you apply, the sooner you can get your money. But you should know what you are going to do with the money when you get it. That’s why need a plan. Of course, you’ll never get a cash advance if you don’t apply at all.
Each of these steps to getting a cash advance for your business is necessary because success doesn’t happen in a vacuum. If you know you have enough receivables coming, then you’ll be at peace with getting the cash you need to run your business. Plan what you are going to do with the cash when you get it because if you don’t plan, you are likely to spend the money on items you don’t need or that won’t produce an ROI. A healthy business always has a plan.
Almost any type of business can get a merchant cash advance. From construction companies to beauty salons, the cash you need to stay in business is just around the corner.