The lifeline of a merchant cash advance has been used by successful storefronts nationwide, but many business owners say the hardest part of getting an advance is knowing how to use it wisely. This article has the expert advice you’ve been looking for. We’ll review the top 5 spending strategies you can employ to put your loan to good use.
The Importance of Goals and Boundaries in Modern Business
Before we get into how to spend your money, there are two important questions to discuss. Question one: how do you approach credit? Question two: what are your professional goals? Here’s why these questions matter.
Chances are that many of you applied for a merchant cash advance because you are a start-up company or you have poor credit. In either case, the precedent you set also sets the tone for your future success. That said, treat the money like any other loan and be very careful how you spend it.
Secondly, know if you want to meet short-term or long-term goals. Creating these simple boundaries will help you invest the money with both the health of your finances and the health of your business in mind.
Top 5 Uses for a Merchant Cash Advance
The key to revenue generation is to think long-term. Here are 3 ways to “pay it forward” in business financing:
1. Put the money to work generating ongoing revenue. This could be anything from a new marketing campaign to a store expansion; if it increases sales and cancels debt, don’t discount it.
2. Deposit the money in an interest baring account. If you don’t know what to do with the advance right away; don’t fall back on bad spending habits. Open a bank account and start earning interest. That way, the money stays available for emergencies and you can recover faster while avoiding debt.
3. Pay off high interest credit cards. Stop paying interest rates and fees for credit. Use the borrowed money to pay your credit cards off and put the cash toward paying off the advance faster.
If your goals are short-term and you just need funds to get through a lean sales period; consider the following strategies:
4. Use the funds for payroll and vendor services. Every business owner understands the stress of making sure all of their ends are covered. A cash advance can give you the means to cover your payroll and expenses when your profit margin falls short.
5. Avoid the penalties and late fees associated with operating costs. Bridging the gap of a short fall is difficult; especially if you’re dealing with collections and past due accounts. A merchant cash advance can help pay off utility and overhead costs until your revenue increases.
The open-ended nature of a merchant cash advance leaves many business owners wondering how to put the money to its best use. With these tips and the right mind set; you won’t be among them. Consider these strategies and start putting your money to work for you.