The list of things working capital can be used for is seemingly endless. Updated equipment, new staff members, expanded inventory – owners rely on business loans to help them with many different projects.
It’s for this reason that having the freedom to spend your loan proceeds on what you wish is vital. Unfortunately, this financial independence isn’t always a given when obtaining loans from traditional financial institutions.
For instance, if you were to acquire a 7(a) loan through the U.S. Small Business Administration, there would be a number of restrictions on how the money could be spent.
Funds could not be used to refinance existing debt if the lender may sustain a loss and the SBA would be held responsible. You could not affect a partial change in business ownership if it might not benefit the business. Additionally, you could not repay delinquent state or federal withholding taxes that should be held in trust or escrow.
In fact, the SBA states loans cannot be used for any reason it does not deem as a sound business purpose.
These restrictions are just one reason why more small business owners are turning to alternative lenders to obtain the funds they need.
The advantage of a merchant cash advance
First and foremost, merchant cash advances allow you to use your funding any way you choose, including:
- Expanding your business
- Increasing your inventory or product line
- Opening new locations
- Purchasing equipment
- Renovating or remodeling
- Consolidating high-interest debt
- Paying taxes
What’s more, unlike traditional business loans, merchant cash advances are structured so you only pay them back when you get paid yourself.
You can receive up to $250,000 in cash in exchange for a fixed dollar amount of your future credit card sales. National Funding will automatically retrieve a small fixed percentage of your daily transactions at the end of the day until the advance is paid off.
This makes repayment much simpler when compared to other types of loans, and qualifying is quick and easy. Businesses must be operating for at least one year and have average monthly credit card transactions of at least $3,000.
This option gives you the freedom you need to ensure your business succeeds without the strict restraints put in place by traditional banks and credit unions.
Finally, unlike business loans that require you to put up assets, merchant cash advances from National Funding require no collateral. You can receive cash in as few as 24 hours and have it deposited directly into your bank account.