It is not unusual for a start-up business, or even one that is well-established, to occasionally experience a cash flow problem. Do you want to take advantage of a time-sensitive business opportunity but lack the liquidity? Do you need to repair or replace an old piece of equipment? Would a new piece of equipment improve productivity? Maybe you just need cash to meet payroll for a couple of weeks until you get paid for an open account. One solution that is quickly becoming a favorite among many small and medium-sized business owners is the merchant cash advance, a specialty of companies like Allied Capital Corp.
A “merchant cash advance” is not a loan in the traditional sense. The business receiving the “loan” does not repay the money through a series of regularly scheduled payments. Rather, a business will receive a lump sum of cash and pay back the money by letting the cash advance company take out a percentage from their future credit card sales. This allows for flexibility in the repayment schedule. If sales are brisk, then the cash is repaid quickly because the money is there. If sales are slow, then the loan is repaid slower, allowing the recipient of the money to repay the debt on his own terms.
In the present day we are living in an unusual business climate. The stock market has challenged its all-time highs, unemployment is down, optimism is up, and it seems like we left the Great Recession far behind us — yet banks are still hesitant to make a loan to many small businesses. How then is it possible to seize opportunity, grow, or ride out a slow quarter when the banks are so unwilling to take the slightest risk? It might be time to investigate a company like Allied Capital Corp. Merchant cash advances are the convenient, reliable, and proven solution that so many modern companies have for cash flow problems today.