In a business, what you have is not always going to meet the demand of what you need. That is part of the natural ebb and flow of money that business owners have to face on a regular basis. The reasons behind this vary greatly, but all lead to the same conclusion; the ability to get a small business cash advance can help.
There are a number of costs associated with running a business that you may not have budgeted for, but are essential to your growth and success. According to a report issued by the Global Entrepreneurship Monitor, over 50% of businesses that go under do so because they can’t make a profit. This is not always because the product or service is not selling. In some cases, it’s due to those unexpected expenses eating at the profits. A small business advance will help in meeting those expenses without having to dip into your business profits.
Some of the more common necessary expenses that you may not have budgeted for include:
- Licenses and Permits – Licenses and permits are all governed at the federal, state and local level, causing the type and cost to vary greatly. The types you will need also affect the cost. Typically, you will need to renew them annually, which may unexpectedly eat into your business expenses. A fast merchant cash advance will cover that expense and allow you to pay it off based on your daily sales.
- Accounting Fees – An entrepreneur with a small business may think that doing the books and paying business taxes is much like balancing their personal checking account. This is far from the truth, and you could potentially lose thousands of dollars in unclaimed expenses if you don’t allow a professional to take care of your yearly taxes for you. An accountant fee is a small price to pay for avoiding mistakes with the IRS. If you don’t have the cash on hand to pay the accountant upfront, you could rely on a small business advance to cover this cost.
- Lawyer Fees – Contracts are an important part of any business. It is imperative that yours will stand up in court. Lawyers charge by the hour, and their bill will add up quickly, leaving you with an unexpected expense to cover. Yet, like with the accountant, using a small business cash advance to pay for the service now will likely save you thousands of dollars in the future.
- Merchandise or Supplies – It will be when you have the least amount of working capital on hand that a wholesaler will reduce their prices on goods or supplies that you can use to grow your business. In this case, a small working capital loan will let you take advantage of that opportunity. If you have unpaid bills for past sales, invoice factoring could put that money in your hands now. That way you can keep up with the demand in the future.
- Emergencies – There is no telling when your boiler will break down, but it is most likely to happen during the coldest snap of the year. A small business cash advance is perfect for this type of situation, as they work fast to get you the money in hand. A merchant loan, for example, could take as little as 24 hours, ensuring that any building emergencies that arise will not interrupt the ebb and flow of your working capital.
Your Other Options in Comparison to a Small Business Advance
Fast cash advances are not the only solution a business owner has when they need an influx of working capital. For example, you might also try:
- Bank Business Loans – This is the traditional business owner solution. It works much like any other loan product from a bank. Your business borrows a certain amount of money at a set interest rate and terms. You then make monthly payments on the combined total of principal and interest. The problem with bank business loans is that they are not fast. Some could take months for the bank to process before you even know if you have been approved. Being approved is not easy either, as your personal financial past is examined along with your business finances. Merchant loans or even invoice factoring are interested in how the business is doing now. They’re not interested in whether you defaulted on a credit card five years ago.
- Personal Loans and Mortgages – You could also put yourself into personal debt in order to cover unexpected business costs. You will however want to check with the bank first to see if they allow for the loaned funds to be used for business purposes. The downside to this is the same as with a bank loan. Both take a lot of time and put a lot of scrutiny into your credit history.
- An Investor – Selling a part of your company is a good way to get some fresh working capital. It can be put towards your expenses and help build your profitability. You’ll have to passionately pitch your needs and business goals to prospective investors. You have to do this until you are able to get one to agree to the investment.
Small Business Advances
Again this is a time consuming endeavor. Further, it leaves you in a position where you may have to relinquish some control over your own business. It can mean you to have to share part of your profits so long as the partnership is in effect.
A small business advance is only helpful when it is able to be obtained quickly, with minimal background checks. Your business does not have the benefit of time when caught in a pinch with no working capital on hand.
A small business advance should be designed to be executed quickly. It should also have terms that have little impact on your bottom line. These keep your business running as usual, while those unexpected expenses are taken care of.