by Paul Kline
While these comments are written specifically to professional practices, they equally apply to all businesses. Growing your business can be a challenging venture. Investing in advertising, equipment, skilled staff, and more, while accumulating capital to achieve your goals can make for a delicate balancing act. To sidestep the entanglement of bank loans, turn to merchant cash advances, or MCAs.
MCAs Have No Limitations
Traditional loans usually have a designated purpose, such as for fixed assets or property. Using funds for purposes other than their contractual designation can leave professional practices in breach of the terms of the loan agreement. MCAs, on the other hand, can be used to anything your practice needs. From advertising to equipment, supplies, hiring additional staff, practice acquisitions, and more, MCAs can be used for multiple purposes. Merchant cash advances have few, if any, restrictions on the use of the funds. You are free to apply the funds in how you deem best to grow your business.
MCA Funding Is Not Debt
One of the main reasons professional practices prefer MCAs is that they are not debt. Merchant cash advances are an infusion of working capital structured around future receivables. No collateral is necessary, and credit scores are not negatively impacted. Your practice received an advance in working capital, which can be put toward growth projects. As clients pay their bills, a small percentage goes toward repaying the balance owed on the advance.
Since MCAs Are Not Debt, There Is No Prepayment Penalty
Another nice thing about MCAs is that there are no prepayment penalties triggered if you want to pay off your balances ahead of schedule. This is part of the flexibility that merchant cash advances offer. Instead of being locked into a payment schedule, the percentage of receivables paid allows practices to repay the advance without impacting finances during lean billing periods. On the other side of the coin, when a practice is receiving many payments in a short period of time, the balance on the MCA can be zeroed out quickly, without triggering any hidden fees.
Work With A Professional Funder
You will be inundated by phone calls and emails which promise easy access to capital. Properly vet the person supposedly representing you to make sure they will not simply take your information and ship it to dozens of direct funders. The easy promise you heard will guarantee a commission to the representative you only met by phone, but dramatically affect your personal credit score and your information will be given to groups without your direct permission. Make sure your representative is more interested in a long-term relationship to help you meet your objectives, rather than making a quick sale for a quick buck.