Spring is here, and more people are taking on home projects than in previous years. From creating gardens to sprucing up the backyard to DIY home renovation projects, spring is set to be a rush for businesses that provide home goods and plants. While many businesses are just reopening after last year’s pandemic, there is a need for working capital to ensure they have the inventory and staff to handle the volume of orders on the horizon. For these reasons and more, seasonal businesses use merchant cash advances.
How Do Merchant Cash Advances Work?
Merchant cash advances provide seasonal businesses with working capital ahead of anticipated sales rushes. The advance is structured around a company’s financial history, so no collateral or credit ratings are involved. Similarly, no debt is placed on the balance sheet. This gives seasonal businesses much more freedom than traditional debt-based loans.
Flexible Repayment Methods
In contrast to traditional loans, merchant cash advances do not have monthly payment schedules. Instead, the balance of the advance is repaid electronically from a small percentage of sales receipts from customers who make purchases with credit cards. This gives seasonal businesses the flexibility they need to repay financing without placing a major strain on cash flow.
Traditional loans typically have a single purpose, and businesses cannot use funds for anything outside of those parameters. Merchant cash advances provide discretionary capital, which means seasonal businesses can use the funds for anything they need, whether it is used for marketing ahead of a seasonal rush, stocking up on inventory, hiring additional staff, keeping working capital on hand, or anything else they need to maximize their sales.
While traditional loans are single-use, merchant cash advances can be used whenever they are needed. Depending on the anticipated rush, some seasonal businesses will take out multiple advances or spread them out for each location the business has in the area. In short, merchant cash advances are versatile, robust, and flexible.
Make the most out of your spring sales with a merchant cash advance from Golden Century Lending. Contact our offices today to get started.