When your business runs into financial setbacks, knowing where to turn can be a lifesaver. For some, a merchant cash advance is a perfect solution. In this arrangement, a business can leverage future credit card transactions in order to secure an advance. If you’re in need of immediate access to working capital, an MCA is an ideal fit. Since an advance of this nature is appealing, lenders tend to put strict requirements on applicants in order to mitigate losses. Look over these tips and learn how to see the best results from your application.
Understand Your Current Credit Rating
As with most alternative financing solutions, your eligibility with an advance will be partially determined by your credit score. A low rating typically indicates a lack of financial responsibility, meaning a lender is less likely to approve your application. Before you begin the process, take a look at the credit score requirements of different lenders. Next, look up your own credit rating and determine if you fit the criteria of the most appealing lenders. If your score is lower than you’d like, make an active attempt to pay down debts and get in better standing for your future financing needs.
Learn More About Which Industries Benefit Most From an MCA
Though a merchant cash advance can seem appealing, it is not the right fit for all businesses. In fact, some industries tend to benefit more from an advance of this nature than others. According to experts, businesses that rely heavily on credit transactions are more likely to have a positive experience with cash advances. If your company conducts more sales with cash than credit on a monthly basis, you are not the best candidate for this service. Review your recent credit transactions to gain more perspective on whether you’ll benefit from an MCA.
Create a Plan of Action
Lenders prefer when applicants have concrete goals for how they plan on using borrowed funds. Ask yourself why you need this advance in the first place. Are you looking to cover operational costs during a period of slower sales? Do you need extra funds to invest in an enticing opportunity to grow your brand? Not only will this highlight your financial responsibility, but it will also give the lender a better idea of how much money you are looking to receive. While a business plan is not always necessary, it can greatly increase your odds of approval.
When your business is in need of additional capital, there are many financing solutions worth looking into. If you conduct a good amount of your sales through credit card transactions, a merchant cash advance could be the perfect fit for your needs.