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Which Industries Benefit the Most from Merchant Cash Advance?

Which Industries Benefit the Most from Merchant Cash Advance?

3
Oct 2019
24
Jan 2025

Many business owners have trouble accessing traditional business loans. If you’re one of them, you may be wondering about alternative funding solutions. One of those solutions is the merchant cash advance, or MCA. Some businesses benefit from Merchant Cash Advance more than others. If you’re in one of these industries, MCAs could be the right choice for you.

Restaurants Need More Flexibility

Many restaurants face huge ups and downs, making their income somewhat unpredictable.If you already accept credit cards, merchant cash advances are a great way to secure flexible funding. MCAs could also help you invest in kitchen upgrades or follow up on trends like food trucks or local eating. You might even be able to open a second location to keep business growing.

MCAs Help Auto Repair Shops

Traditional financing can be risky for an auto repair shop. If you fall behind on payments, the lender might decide to collect on the loan collateral. That could mean the loss of expensive equipment or even your garage space.Merchant cash advances let you keep working without fear of the debt collector. Payments are based on your credit card sales, so there’s no need to worry about missing a payment.

Specialty Retailers Benefit from Merchant Cash Advance

Retail is another industry with slim margins. Specialty retailers face even slimmer margins, often because they’re selling to a small crowd.MCAs could help you weather the ups and downs. They could also help you upgrade your space or move to a more attractive one, so you can be where your customers are.

Is MCA Right for You?

Merchant cash advance has benefits for many different businesses. If you think it might be the right solution for you, get in touch with us. We can help you explore all financial solutions for your business.

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Business Loan in Canada

There is a wide array of services available to businesses in Canada seeking to bolster their cash liquidity. This article will explore some of the most popular options, as well as their best use cases. These financial solutions typically include a combination of bank loans, CEBA loans, government business grants, factoring, cash advances, payday loans, and microloans.

Businesses can utilize these financial options to optimize growth, gain liquidity, bridge emergency situations, or capitalize on opportunities.

Let's delve into our options:

1. Traditional bank loans

This is the most conventional form of financing that small businesses can utilize to obtain Typically, these loans are secured by collateral, and may offer lower interest rates, making them an appealing choice for businesses with strong credit. However, small and medium-sized businesses adhering to conservatism and GAAP principles might have lower perceived financial strength, which can make obtaining traditional financing more challenging, especially if the bank relies on financial statements as part of its due diligence process. This can be particularly problematic for new startups and businesses without a significant financial track record. Furthermore, liquidity provided might be limited if a business is relatively new or experiencing volatility, even with collateral in place.

2. CEBA loans

The Canada Emergency Business Account (CEBA) loans are interest-free loans of up to $60,000 designed for small businesses impacted by the COVID-19 pandemic. These loans are 100% backed by the government and do not require any collateral. Businesses can use these loans to cover operating expenses such as payroll and rent, as well as for purchasing equipment or expanding their operations. The CEBA loans offer flexibility and accessibility with a few caveats. Firstly, the loan forgiveness repayment date has been extended to December 31, 2023, for CEBA loan holders in good standing. This means that loan holders may have to start repaying their CEBA loans as early as 2024. Secondly, eligibility is only applicable to businesses that have had an active business account with their financial institution as of March 1, 2020, and can demonstrate a decline in revenue due to the pandemic.

3. Factoring

Factoring enables businesses to sell their accounts receivable (invoices) to a third-party (a factoring company) at a discount. The factoring company then acts as the agent to collect payments from the invoice customer, providing the business with liquidity (cash) based on a certain percentage of the invoice amount. Factoring can significantly improve cash flow for small and medium-sized businesses by offering liquidity and quick access to funds. It is also helpful that the factoring company will be the one taking care of ensuring invoices are paid, freeing up valuable resources for small businesses.

4. Government business grants

The Canadian government provides an array of business grants designed to help small businesses flourish and These grantstypically target specific industries or business activities, such as clean technology, innovation, workforce development, and international trade, among others. A considerable number of grants currently emphasize research, development, and exporting. The application process for these grants can be intricate, requiring well-prepared grant proposals that effectively communicate the business's objectives, anticipated outcomes, and potential impact. This process is often competitive, as numerous businesses vie for the limited funding available. Newer businesses or those without prior grant writing experience may find this process daunting, and may benefit from seeking professional grant writing assistance or collaborating with experienced partners in their industry. Despite the challenges, securing a government grant can be a game-changer for small businesses, providing essential funding without the burden of repayment, and fostering growth, innovation, and competitiveness in the marketplace.

5. Payday loans or Microloans

Payday loans and microloans are small, short-term loans that are typically utilized to address unexpected expenses or navigate temporary cash flow gaps. While these loans may not be suitable for long-term financing needs due to their relatively higher interest rates and fees, they play a vital role in providing financial support during emergencies. By offering quick access to funds, payday loans and microloans help businesses remain afloat and operational during challenging times, allowing them to successfully weather temporary cash flow issues that are anticipated to improve in the near future. This targeted financial assistance can be a lifeline for businesses, enabling them to maintain stability and continue serving their customers as they work towards recovery and growth.

6. Cash Advance

A cash advance, particularly in the form of a Merchant Cash Advance (MCA), is an innovative financing solution that provides businesses with a lump sum of cash in exchange for a percentage of their future sales (typically credit card sales). Cash advances and MCAs can be exceptional financing options for businesses that need funds swiftly or require increased liquidity to seize opportunities that demand prompt. One of the key advantages of this financing option is its speed and flexibility. Cash advances can be processed more quickly than traditional loans, often within a matter of days, allowing businesses to address their financial needs without delay. Additionally, repayment terms are tailored to the business's sales volume, making it a more manageable solution for businesses with fluctuating revenues. MCAs are particularly valuable for new businesses and small enterprises that may face challenges in obtaining traditional bank loans due to a lack of financial history, inadequate financial book strength, or a dearth of collateral. By offering an alternative financing avenue, cash advances empower these businesses to overcome financial barriers and pursue their growth objectives. Ultimately, the various financing options available to Canadian businesses each have their own strengths and specific use cases. Traditional bank loans can be attractive for businesses with strong credit, while CEBA loans offer interest-free financing for those affected by the COVID-19 pandemic. Factoring provides immediate liquidity to businesses with outstanding invoices, and government grants can support targeted industries and activities. Payday loans or microloans can assist in managing short-term cash flow gaps. And cash advances offer rapid access to funds for businesses lacking financial history or collateral. The choice of financing option will depend on the unique needs and circumstances of each business. By understanding the advantages and limitations of each option, businesses can make informed decisions about the most suitable financing solution to support their growth, liquidity, and success.

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5 Ways to Build Engaging Relationships with Your Clients

It shouldn’t come as a surprise that you need to build trust with your clients to drive sales. People buy from companies they trust, and you have to earn that trust. For most companies, that means building engaging relationships with clients over time. The more you interact with the client, the more opportunities you have to convince them to trust you.Building relationships is easier said than done. These five methods could help you engage with your clients on a deeper level.

Ask Questions and Get Answers

When was the last time you took a customer survey? Companies shouldn’t shy away from getting feedback from their clients. Ask the people you work with what you do well and where you can improve. It’s important to put that feedback into action. When your clients see you’re listening, they’ll feel their input really matters.

Go Above and Beyond

When you receive exceptional service, it stands out in your mind. You should aim to exceed your clients’ expectations at every turn. By doing so, you show how important the client is to you.

Communicate and Connect to Build Engaging Relationships

Have you ever watched a video or read an article, and thought, “This client needs to see this”? You should attend to clients’ needs this way. It’s part of communicating and connecting with people on a human level. By sharing content or sending an email to check-in, you can more easily build engaging relationships with your clients.

Show Appreciation

Everyone likes to feel important, and your clients are important to you. Show your appreciation by providing a loyalty program or a special offer.

Remember Patience is a Virtue

Today’s customers don’t like being pitched to, so cultivate patience instead. A client may not be ready to buy today. They may need more information. That’s okay. You can support them by answering questions and sharing information. By being helpful, not pushy, you’ll build trust and relationships with your clients.

Finance Your Relationship-Building Program

Building relationships drives sales and company growth. Conducting a survey or starting a loyalty program can cost though. Learn how a merchant cash advance could help you build better relationships.

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7 Small Business Trends to Leverage in 2020

The business world is evolving and new small business trends are emerging. Which ones should small businesses adopt for 2020? These seven trends are great contenders.

Embrace Social Media Storytelling

Social media is everywhere these days. With the rise of Facebook Live and Instagram stories, everyone wants video content. Tell your brand’s story with a creative mix of social media.

Think Green and Social

Today’s customer wants to buy from a company that shares their values. Think about a green initiative like reducing waste or adopting biodegradable packaging. Social causes are also popular.

Learn to Leverage eCommerce

eCommerce is finally hitting its stride. Traditional retailers are getting in on the act. Create a great website for your small business and watch your profits soar.

More Technology to Do More

Technology is driving eCommerce, but it’s also driving other parts of your business. Think about how automation could help you keep the books, conduct payroll, and so much more.

Make Your Employees Happy

Businesses today are investing more in their employees. Employee happiness improves productivity and the bottom line. Think about training and development initiatives or a wellness program that will keep them moving.

New Marketing Trends Will Dominate

Digital marketing has finally surpassed traditional marketing. New digital marketing media continue to emerge as well. Think about the rise of voice search or the popularity of audio streaming services as you plan your next campaign.

Personalize Customer Service

Finally, small business owners must realize the importance of customer service. Deliver personalized service to every customer, and you’ll win their loyalty.

Get the Funds You Need

Any of these initiatives could be a big financial undertaking for a small business trends. Get the right financial backing with a merchant cash advance. With the right funds, the possibilities are endless.

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