Taking out a merchant cash advance seems like a very convenient quick-fix solution to the cash-strapped business owner. Merchant cash advances are typically more expensive than traditional business loans, and it’s better to beware of solutions that seem too good to be true. The decision to take the leap and inject some much needed cash into the operations should be weighed carefully so when you do take the plunge it does not end up in disaster.
The Wise are always Wary
When you try to look up sources for securing merchant cash advance, you will find that there are lots of lenders offering quick loans in the form of merchant cash advances. But most of these financial organizations operate without many regulations in place. This is a bad sign, any trustworthy organization makes diligent efforts to follow best practices and adhere to regulatory standards. Remain wary of such place and keep the following things in mind:
This is the most important thing you can do, be diligent in your research; there is a lot of information available online to help you pick the right provider. The terms and conditions of different providers will vary, proper research will enable you to compare and contrast. Check and verify provider’s information on a website such as the Better Business Bureau. If you can, get in touch with other business owners who have borrowed from them and ask about their experience.
Track the Numbers Closely
Keep track of your sales and sales forecasts. This will help you justify the need for a loan and the forecasts will tell you if you will be able to pay back the loan on time or not. Do not make the mistake of guessing, actual data and calculations might end up telling a different story than your estimations.
Afterwards track sales for at least six months and determine if your payback forecasts are on track. If the results show that you might not be able to pay back the loans then readjust and try to lower costs.
Check Extra Fees and Processing Charges
Some providers will try to tack on charges for applications and funding, etc. These are not normally demanded. Compare the numbers they quote you and see if anyone else has the same rates.Try to avoid these providers, extra charges signify that the provider will have stringent terms.