3 Reasons To Consider A Canadian Merchant Cash Advance

One of the largest obstacles preventing aspiring small business owners from launching their businesses is access to working capital. In fact, this lack of capital can hamper efforts to expand an existing business. A Canadian merchant cash advance can resolve that issue. It can provide access to the money you need for your company's daily operations. While thousands of businesses languish, struggling for cash flow, your company can enjoy a flexible source of capital to launch and expand your product line or services.

Below, I'll explain what a merchant cash advance is. You'll also learn 3 reasons why this type of financing might be the perfect solution for your cash flow needs.

What Is A Canadian Merchant Cash Advance?

Conventional financing for businesses in Canada usually involve bank loans. You approach your bank, obtain a small business loan and are locked into a payment schedule for the life of the loan. A merchant cash advance works differently. The company you choose to work with provides the capital your business needs without the terms of a traditional loan. As your sales grow, a portion of your credit card receipts are transferred to the cash advance company. It's an automated process that requires little maintenance. Here are 3 reasons why Canadian companies should consider this type of financing:

#1 - Quick Approval Process

Business loans in Canada can be difficult to obtain. The lender must check your credit and you're required to submit to a lengthy approval process. For small companies, the time spent waiting to be approved for the loan can be problematic. Business cash advances don't require a long waiting period to be approved. Most advances can be approved within a few days, providing business owners with fast access to capital.

#2 - No Credit Check

When business owners apply for a loan at their bank, they're forced to undergo an extensive credit check. The bank must check their financial records to measure the viability of the company. That helps ensure the loan they offer a business will be repaid. Sometimes, merchants are denied business loans based upon this credit check. Other times, the process is grueling and frustrating. Unlike a business loan, a Canadian merchant cash advance doesn't require a credit check. The advance is secured by your future credit card receipts.

#3 - Pay As Your Business Expands

A business loan locks merchants into a payment schedule. That can present problems to small company owners. Often, the strength and volume of your business reflects market dynamics. For example, if you operate a restaurant in Toronto, the local economy can impact your sales. If you run a car washing operation in Vancouver, your revenue rises and falls with the health of the market. A Canadian business cash advance doesn't require a fixed repayment schedule. Instead, the advance is repaid automatically with a portion of your sales. That helps eliminate the stress of meeting a fixed payment each month.

Controversy And Litigation

Last year, a lawsuit was filed by AdvanceMe against other companies that offered small business cash advances. The lawsuit's purpose was to uphold AdvanceMe's patent and protect their exclusive rights to offer this type of financing. The Supreme Court ruled that AdvanceMe's patent was invalid. This ruling has allowed a higher level of competition in the Canadian merchant cash advance market. Ultimately, this increased competition will lower prices for the benefit of small Canadian companies.

Finding a dependable source of financing for your small business can be challenging. Most traditional means of financing require long waiting periods for approval, extensive credit checks and inflexible payment schedules. By contrast, a merchant cash advance can provide the working capital your company requires easily and quickly. If you're searching for a flexible form of cash flow, consider using a business cash advance.