Business capital is the money that you require for your business venture. Whether you need money to expand, boost cash flow, or finance a startup, you inevitably require capital at some point in your enterprise. Businesses often fail due to lack of enough money, attributed to various reasons especially limited resources. The availability of a reliable source of working capital should, therefore, be a valuable quality of your venture.
Currently, there are numerous financing options that you can use to raise working capital. However, most of these options are not convenient, nor are they easy. For instance, raising business funding from banks can be a lengthy and frustrating process, especially if the loan is disapproved after waiting. Being able to obtain cash advance is one of the best ways of dealing with your business financial needs.
Can My Business Raise Capital from Merchant Cash Advance Providers?
If your business carries out credit/debit card transactions, then it is a sure path to raising business capital from merchant cash advance providers. Most of these lenders only request for the business records, including several months’ history of the card transactions. This requirement is essential since merchant cash advances are not actual loans. They are just cash advances backed by to the future credit card sales of your enterprise. The application and processing of merchant advances can take only a week or even lesser time.
Unlike the normal bank loans, working capital raised from merchant cash advances has no specified uses. Therefore, you need to be very careful since you can easily spend the money on non-essential aspects of the business.
Where Should You Invest the Business Capital Raised from MCA Providers?
The funding you secure from MCA providers can be a liability if not well used. Here are some good places that you can put the working capital from MCAs for more productivity in your business:
- Purchase new equipment.
Things wear out or break down. At some point, it will become necessary that you secure replacements for equipment like machinery and computers. MCAs are good for this type of use.
- Bulk inventory purchases
In order for your business to run smoothly and profitably, you need to ensure that you have adequate inventory at all times. If you are running out of stock, get capital from a MCA provider can enable you to purchase bulk inventory at discounted prices.
- Advertising costs.
MCAs can boost your company’s brand awareness if spent on marketing.
- Offsetting other debts
Sometimes, your business might be pressured to pay other debts, especially if there is a threat of huge fees if late. MCA business capital can be used to offset these loans, particularly if your business faces the threat of a foreclosure. MCAs are good in such instances since they do not require collateral of their own.
- Unplanned expenses
Your business may experience some unplanned but urgent expenses. At the same time, you might have no other sources of the desired immediate cash. MCA capital can fill this void effectively and ensure the operations of your business remain intact.
The above are just some of the ways that you can effectively use the business capital raised from MCA providers. Note that those needs are either urgent, necessary, and carry high returns, sometimes even immediate.
Be careful with how you choose to spend merchant advances. Unwisely spent, they can prove very difficult to repay due to high-interest rates.