How a Cash Advance Can Help Your Business Grow
August 15 2018 |
One of the biggest frustrations faced by business owners is acquiring the funds for an expansion or business improvements. Small businesses often need cash fast to be able to continue operating. Resorting to a cash advance doesn’t mean a business is in trouble. There are many situations that are out of your control and sometimes you just need that cash quickly to capitalize on a time sensitive opportunity or to fix an unexpected issue. Let’s have a look at a few situations when you might need a cash advance to help your business move forward.
Let’s say you have an amazing “now or never” opportunity to acquire inventory from a vendor in China. The Chinese seller is willing to sell tables at $50 per unit that you could resell at $600 at your store. On average, it takes around 6 weeks to get a reply on the loan application through the bank and you need the money now. This is a great example on how a fast microloan program could come in handy and allow you to profit from it. You know you will be able to pay this money back as soon as you receive the product and it starts selling.
You own a hair salon and your patrons keep asking if you offer basic spa services as well. You see there’s a demand and there’s an opportunity for additional revenue, but you don’t have funds available to invest at the moment. This is another good reason to borrow because the return on your investment is looking good. You will finish paying the loan at some point, but the revenue from the spa portion will more than pay for itself.
Dealing With Unexpected Situations
You are the owner of a restaurant. Yesterday the old fridge stopped working and it will cost you at least $6,000 to buy a new one. Time is of the essence as you need a working fridge as soon as possible, so you need cash fast to continue operating your business. Getting a fast cash advance will help you out in this difficult situation as well.
At Pivotal Payments we’re happy to help the merchants gain access to much needed alternative funding by bypassing restrictive bank loans.
We asked Charlie Bensimon, the Funding Director of Pivotal Payments’ Cash Advance Department, to explain how the Cash Advance program works. Charlie has been in the microloan business for over 12 years. He works with multiple lenders and he knows the “ins and outs” of the industry.
What are the main benefits of a Cash Advance?
Getting a cash advance as an existing merchant is not complicated. Our approval rate is around 90%, when the bank usually approves less than 10% of the applications if there’s no collateral or personal guarantee. Our Cash Advance program doesn’t require merchants to put their houses up as collateral for the working capital.
- Easy approvals
- Minimal paperwork
- No collateral
- No personal guarantee
- Customized solutions
- Funding within 5 days or even less
- 90% approval rate
What kind of programs do you offer and what are the differences between them?
At the moment we offer two programs: one is based on the merchant’s credit and debit card sales, and another is based on the merchant’s gross sales including cash and checks. With the ACH program (gross sales) the merchant may be eligible to have a higher amount funded, and fixed daily amounts would be used for repayment of the funded amount.
The program based on the merchant’s credit and debit card sales only, would result in a smaller amount funded (funding amount based on sales) and the daily repayment amounts would be a fraction of the merchant’s daily batches. With this program, the merchant will not be affected by a slow season since we are receiving repayment when the merchant is making sales.
What is your ideal candidate for cash advance?
There is no ideal candidate, but here are a couple of points that we look at when working on approving a merchant:
- More than one year in business
- 10K+ in credit and debit cards
- 200K+ in gross sales
What would be a good reason to use extra working capital? Can you give an example?
Anything that can create new revenue is a good reason to borrow! The merchant has to look at future cash flows when deciding to get an extra working capital.
All these reasons will most likely generate positive cash flows in the future.
Do you need help getting you the working capital for your business? Email Charlie to schedule an appointment at email@example.com (merchants who currently process with Pivotal Payments only).