Running a small business requires plenty of capital. The good news is that many enticing financing options exist. Among them is a merchant cash advance, which can be ideal, depending on your situation. Understand how they work and what actions optimize the odds of receiving an offer.
Assess Your Venture
Merchant cash advances are based on credit card sales. After you receive a lump sum from the lender, a percentage of every sale made with plastic goes toward paying down the balance. For this reason, these loans are most appropriate when customers often use credit cards. Service-based industries, such as restaurants and retail stores, usually meet this rule. If your operation primarily deals with cash, you’re better off seeking another form of funding.
Assemble Your Credit Card Sales Statements
These lenders want to see that your customer base is frequently using credit cards. Collect documentation that proves this is the case before approaching a loan representative. Producing the necessary paperwork on your initial contact is bound to leave a sharp impression.
The length of sales history you must supply depends on the lender. Some have stricter requirements than others. Before handing in your application, double-check that you’re at least providing the minimum.
Check Your Credit Score
Solid credit remains mandatory. Find out whether you meet a lender’s qualifying baseline before wasting time filling out paperwork. Contact one of the major credit rating agencies to receive a free report. If the results are unfavorable, specific strategies can boost your numbers. The internet is chock full of ideas for making this happen.
Consider Your Spending Plans
The amount of money you need is a critical variable. Any lending organization will have an inherent interest in knowing how much. Arrive at this figure by researching what you hope to do with supplied dollars. Sway potential lenders by putting together a small presentation on the topic.
Are you in need of equipment? Investigate the going rate for the desired acquisition. Be sure to incorporate the potential for boosting profits into the equation. If you’re thinking about hiring extra employees, calculate the burden that will weigh on your budget. An expansion is a complex project full of varying factors. Account for the expense of maintaining another building, taking care of payroll, and handling legal fees.
If financing would help grow your enterprise, the solution could be a merchant cash advance. Pursuing this style of funding, though, demands preparation. Check your situation, understand how such loans function, and set the stage for a satisfying outcome.