What to Consider Before Applying for Another Merchant Cash Advance
In this post, we’ll review a few aspects that small business owners should consider before applying for another merchant cash advance.
Discuss it with your Funder
Before applying again, you should discuss the process with the company who provided the first advance. By doing this, you’ll get a better idea of the amount you could be approved for, and how quickly you could receive another merchant cash advance. These aspects may be affected by how quickly you remitted your previous advance, assuming that you have fully satisfied your obligations.
Usually, it will make more sense to stick with your original funder, but consider speaking with others to understand what your options are.
Evaluate the Real Cost
Evaluate the cost of another merchant cash advance, and ask yourself if the financing was worthwhile for your business the first time around. If you have urgent needs, like broken equipment or outstanding bills, a merchant cash advance might be the right route to take. In addition, it is important to consider if you believe you’ll continue to get consistent credit card sales. If not, it might be challenging to remit another cash advance.
Evaluate New Options
Merchant cash advances are ideal for businesses who need fast cash and receive frequent credit card payments. So, if things have changed since you received your cash advance, you might need to evaluate other potential financing sources.
Consider whether you need another lump sum of cash. If not, perhaps a business line of credit will more effectively serve your needs. Or perhaps you’re interested in receiving conventional small business loan through an alternative lender. Even if you do end up applying for another merchant cash advance, you’ll do yourself a disservice by not evaluating all your options.
The choice to apply for another merchant cash advance truly depends on your business’s needs. Maybe you have reason to believe credit card sales will be slow, or you simply don’t need another lump sum of cash. Like any financial decision, whether you need another merchant cash advance or not comes down to risk versus return.
Before applying, consider the things we’ve reviewed in this article in the context of your own business. With research and careful thought, the correct decision will present itself.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.