Using a Merchant Cash Advance for Working Capital in Retail

Retail businesses thrive on their ability to provide inventory at peak demand times, and that requires a careful dance to make sure you have enough for maximum sales without winding up overstocked when demand falls back to regular levels. Of course, how much of an impact misjudging your order has on your business depends on the kind of items you sell. For food that could spoil, it’s a big deal. For package alcohol sales? Not so much, since demand for that is still fairly high at off-peak times.

Most businesses find this strategy difficult to master in part because of a bottlenecking effect caused by capital limitations. If businesses have been slow going into a seasonal upturn, there might not be a lot of working capital outside the regular operational budget and ordering scheme. That is where access to financing through an option like a merchant cash advance can make a huge difference.

Financing in Days Based on Your Merchant Account Income

This cash advance is based on your electronic transaction income through your regular merchant account, so it is ideal for retail and entertainment businesses that do a mixed-income between cash and credit card transactions. If your cash sales pay your bills but your profits come from the merchant account, that is ideal in terms of your ability to easily make the most of the opportunities you have.

Companies that operate completely online and rely totally on a merchant account’s income also find the merchant cash advance useful, but there are higher risks if you only have one income source, and that does affect the cost and size of the offer you get. Either way, approvals typically take five business days or less, with cash distributed within a week under most circumstances. That makes it easy to apply when you need money, right before a demand spike is due because of holidays or seasonal events.

Apply as Needed

Once your MCA is paid back, it’s easy to finance another when you need the capital. Some businesses even use it as a regular source of operational income, financing with an MCA each season just before peak demand is predicted to hit. For those companies, it can cover the cost of seasonal redecoration and sometimes even additional labor as needed. A lot depends on how you make the most of your first couple of rounds of financing to grow your business. To learn more about using a merchant cash advance to grow, talk to a lender today.