In today’s question and answer we are asked, “When is a good time to apply now for a business cash advance.” This is a good question and hopefully we are able to address it for everyone today.
I run a small business and we recently had a piece of critical equipment break. I’ve dedicated all our other resources to other expenses and don’t have the money to pay for the repair. I’ve looked into business advances, but they seem very expensive. Should I apply now for a business cash advance? Thanks for any advice you can offer me.
Thanks for your letter, I hope I can properly address your question today. First I must ask, how critical is the equipment? Does it directly generate revenue for your company and is that revenue more than the cost of the advances you are considering? If you can work around the missing equipment without seriously disrupting your operations you may be better off waiting to have the money to pay for it. It really just comes down to how critical it is to your day to day operations.
As you mentioned a business cash advance can be very expensive. As such you should consider them for emergencies only. When you say you’ve tied up all your other resources, how so? Can you divert funds from one less critical/profitable location to pay for your broken equipment? This may not be the case and you may have to get an advance.
If you do opt to get a business cash advance it is important to realize these vary a great deal from company to company. Some lenders do not actually over business advances and instead insist that you back the loan with you personal finances and credit. Make sure to ask if their advances are backed by your company or by yourself before beginning the process. Also, before you apply now for a business cash advance, it is important to shop between different venders for the lowest cost provider. Make sure to check all required fees as well as straight interest, often times these fees can be more expensive than the interest. Also, make sure to check on the company through third party sources like the better business bureau before agreeing to any loan agreements. IF you don’t feel comfortable with a company go with gut and try to work with another company.