Is a Merchant Cash Advance Consolidation the Answer to Your Business Cash Flow Issues?
It starts with a small merchant cash advance, which leads to another and then another. All that until before you realize it, all of your business credit card sales are going towards paying off these debts. This practice of stacking merchant cash advance loans – or ACH – can quickly put your business into a downward spiral. One solution to help you get out of this cycle of business debt is a merchant cash advance consolidation.
What is a Merchant Cash Advance?
A business in need of quick working capital might look at a merchant cash advance for a cash-flow solution. So long as you have a merchant account and accept credit card payments, you could qualify for this type of small business cash advance.
The merchant will loan you the money you need. Also, accept repayments towards that loan through your credit card sales, virtually guaranteeing that you do not default. Of course, there will be interest and other fees deducted as well. All of this will be bundled together into your payment plan.
Some businesses in dire need of working capital may commit to more than one of these types of business cash advance loans. This practice is known as stacking. It can cause the business to make daily repayments that they really cannot afford. In essence, the inflow of money can come to a near standstill if the business is one that relies heavily on credit card revenue to survive.
The Benefit of Merchant Cash Advance Consolidation
Merchant lenders like this type of business cash advance because the repayment is practically guaranteed through the business’ sales. If you were to consolidate these debts into one, the lender is still going to get their money back. Plus, the fees that they charged you. However, the terms will be adjusted so that you are still able to collect on your daily sales receipts and keep a flow of cash running to your business.
