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Cash flow problems? How SMEs can benefit from Merchant Cash Advance

By on March 11, 2021 0
By Rana Vikram Anand

Money is the lifeline for any business, regardless of industry, nature or size. While established businesses or large businesses may not face significant capital issues, small businesses or emerging businesses may not. Even though there is a wide range of business loans offered by banks, not all businesses are considered eligible. Newer or smaller businesses unfortunately may not find capital support among traditional financial setups.

As the world goes digital rapidly, it has also paved the way for these companies to use alternative methods to secure the funds they need, taking advantage of fintech offerings. Among all these innovative and useful financial products, Merchant Cash Advance (MCA) has become a key alternative.

MCA is basically an advance that can be used against their claims. It can be repaid easily via their daily credit / debit card settlements by paying a small EMI daily. Plus, the application process is quick, easy, and hassle-free, as is accessing the required funding after approval. Therefore, if a percentage of the income comes from debit and credit cards, the MCA is one of the best loan options to fund all business needs.

Here are the benefits of obtaining an MCA, proving that it is the best financing alternative for any emerging business:

Lack of capital no obstacle to work flow and growth

One of the biggest concerns for any small business owner is a cash flow issue, as it can hamper the growth and expansion of their business. There can be a number of reasons for this, from persistent payment delays by some customers to using all existing funds to build up inventory, which can leave businesses with no capital to operate. For this reason, it has often been observed that SMEs have to refuse even the most lucrative customer contracts when signing new projects.

For example, a very rewarding project that can guarantee good business for several months to a major client may require the company to use its own funds throughout, with assured payment due at the end by the client. For any small business or emerging business, hiring staff and keeping the project running smoothly for months on end can become an impossible task, due to a lack of capital. Because of this, they may miss out on a growth opportunity and may even face the same customer as a threat from their direct competitors. In such a cash crunch scenario, MCA may prove to be the best alternative. With an MCA in hand, small business owners can easily pick up and resolve their short-term cash flow issues, leaving their business running smoothly.

Less emphasis on credit history

For a budding start-up or small-scale business, poor credit scores and the lack of the required proof of credit history often present them with a huge challenge in accessing a business loan. In such a scenario, MCA is a relief as it does not focus on current credentials and credit history.

As the refunds take place directly from the transactions of the slip machine in his business in the case of an MCA, the approval ratings for the same are quite high. Therefore, for those business owners who are unable to find regular term loans for proper operation and who are looking for another credible financing method, MCA has become a godsend.

Quick, easy and hassle-free application

In this increasingly digital age, the MCA application process is as easy and hassle-free as ordering food online. With digital lending platforms like Indifi in the palm of your hand, you only need to fill out some key specifications about the business on an online application form. Once applied, the approval process begins immediately and can be completed within a few business days or even hours after application! Due to the nature of the application process, this saves small business owners a significant amount of time and effort that they can now effectively invest in performing essential business functions.

Also, once the application process is complete, approval and subsequent access is not as tedious a process as it might seem. Within hours, once approved, SMEs can receive the funds directly into their bank accounts. In addition, there are no guidelines as to where and how the fund’s capital can be used. From settling unpaid invoices to upgrading equipment, increasing inventory or even releasing new marketing campaigns, the ultimate decision of how funds are used rests with the business owner. Therefore, SMEs can use MCA to solve their cash flow issues the way they feel the need.

Progressive, flexible and easy repayment

After taking advantage of an MCA, the repayment is so gradual that the cost is not felt significantly. Indeed, these refunds are automatic and amortized, occupying a small part of the daily collections of debit or credit cards. Hence, it goes a long way in relieving business owners from the stress of keeping an eye on the due date or writing checks etc.

In addition, there is full transparency in the whole process on a regular basis in terms of daily reports, daily ledger and history. In addition, since there is no collateral involved, the repayment of the advance does not come with a threat of losing the claim on anything that is theirs until repayment. has been completed. More importantly, there is flexibility for repayment in terms of repayment duration, weekly / daily payout, fixed gross percentage, etc. so that businesses can repay according to their cash flow levels without feeling overburdened.

Recharge anytime

If the capital requirements are more expensive than expected, companies can potentially apply for a top-up even when they are halfway through the repayment process, provided they have repaid a certain initial percentage of the initial financing. Traditional financial institutions generally do not offer such offers, making it difficult for companies to apply for new capital. Digital lenders understand the unpredictability of businesses and offer flexibility for additional financing with MCA.

While owning and running a business can become extremely rewarding in the long run, it is a gradual, exhausting, and responsible process, especially in its initial phase. When there is already a lot of stress on operational and growth aspects, lack of capital should not pose new challenges. With solutions like a merchant cash advance readily available, businesses can relieve themselves of the stress associated with finances, thereby focusing more on functions and successfully emerging in their respective segments.

The author is president of Indifi Technologies, a debt financing technology platform for MSMEs)