How business owners should approach borrowing fast capital.
Merchants and business owners should approach borrowing fast capital with a good game plan, and awareness. Capital is the lifeline to any business, and all are in business to grow & expand. For generations, the banks have fell short in providing business owners with adequate funding programs. The MCA product, also known as the Merchant Cash Advance, is the most popular funding program for small- medium sized companies in the U.S.
Us personally, Best Connect Capital, has had a handful of success stories over the years from business owners who borrowed fast capital from our platform. We’ve also had our bad stories as well, but thankfully not too many. The #1 approach a business owner should take while borrowing fast capital is by paying close attention to whom they’re working with. The MCA’s are shorter term, and higher rates, but the terms especially. Let’s say your business borrowed $50,000, and theoretically there was no interest, but you had to pay it back in 6 months. That’s still $2,083 per week in payments. It is an effective product, but a merchant must be mindful. The capital needs to work.
What to look out for..
A business owner needs to look out for misleading quotes, the most, in the fast business funding industry. Nothing is real unless it is in black & white, and even then it’s imperative to be able to verify the company or broker who are getting you the funding program(s). SBA loans are available, even after borrowing fast capital for bridge purposes, but there are criteria’s to meet. Be sure to ask questions, and be sure your provider is able to answer them in a way that makes sense to you. If you overbare yourself with short term debt, there’s a higher risk in defaulting.
To sum it up..
To sum it, opportunities for merchants are readily available. Even taking multiple advances is some cases can pay it’s dividends for a business. 1 particular story is when we stacked a merchant in multiple positions. It was an attorney that had an opportunity to take on a major personal injury case. Due to credit challenges, conventional funding for this matter was not available. Long story short, he took the risk by taking a high amount of short term debt to complete this task. The case settled for $14 million where he earned $5.6M at the end.
Another story was a smaller transaction of a media company that needed to make payroll. The MCA product was able to bridge that gap. The client only borrowed once, it was not easy, but she also noted that if she didn’t take the funds her company would have went under. She paid the debt and moved on.
On the flip side, if your broker urges you to take an unnecassary amount of debt, with the belief it will go away with magic, think again! Be smart while borrowing.