The COVID pandemic has wreaked havoc on the small business community. Unfortunately, the Payroll Protection Program (PPP) and other federally-funded programs fell short for many small business owners. According to a May 2020 article in the Washington Post, more than 100,000 small businesses have closed due to the economic downturn that resulted from the pandemic and that number continues to increase. However, some small businesses are exploring alternative funding options to try and overcome this crisis. For many, a merchant cash advance could be the lifesaver they’re looking for.
It isn’t a matter of choosing one over the other. By all means, as a small business owner, if you qualify for a PPP loan, you should take advantage of it. As long as you follow the restrictions that accompany this type of funding, the loan is forgiven. This is where a cash flow gap occurs for some small business owners. The PPP requires that 60% of the funding be spent on payroll in order for the loan to be forgiven. For businesses that only have a few, that may not be possible. Even if it is, the remaining 40% may not be enough to cover other overhead expenses – never mind financing what you need for a successful recovery.
Obtaining a traditional business loan from your bank became difficult after the financial crisis of 2008. Although approval rates were beginning to improve, the COVID pandemic brought that to a screeching halt. Even if your chances of getting a traditional loan are better than most, receiving that funding can take a long time and involve a lot of paperwork. If it’s time to sink or swim for your small business, do you really have time to wait? Merchant cash advance funding can have you approved in hours and funded in days.
In addition to getting the funding your small business needs to work toward recovery quickly, there are a few other benefits of merchant cash advance financing.
The last thing a small business owner wants to do in the current economic climate is to add long-term debt to their balance sheet. A merchant cash advance is not a loan. It is an advance on your future debit and credit card sales. Repayment is automatically deducted from those sales at an agreed-upon percentage. This means your payments will increase or decrease in proportion to your sales. With the money to finance any operational adjustments your business needs to succeed in the new normal, your sales will rise and your merchant cash advance will be paid off in no time.
That’s not a problem. Merchant cash advance approval is based on more than just your credit score. Their approval rate is generally higher than that of traditional financing. Your credit rating can impact the amount of your cash advance, however, it isn’t the primary factor in granting an approval. The revenue generated by credit and debit card sales is instrumental in receiving approval as well as the average daily balance of your checking account, any overdraft fees, and negative balances.
Unlike the PPP loans, you can use merchant cash advance funding to cover any business expenses necessary. Whether you need to purchase new equipment, develop new operating procedures, or hire an agency to help you compete in the online marketplace, a merchant cash advance can make that happen and have your small business on the road to recovery in no time.
If your business needs an immediate influx of capital to keep your business moving forward, a merchant cash advance can be a great solution. At CapFlow Funding Group, our team of professionals will evaluate your business’s unique situation and help you determine which funding option would best suit the company’s needs. We service many different industries with a variety of different funding needs. In addition to merchant cash advances and invoice factoring, we work with trusted partners to provide additional merchant funding options. Contact us today!
