Small Business Cash Advance
If you’ve got a small business then you know that there are going to be times when you simply don’t have the cash flow to pay for a new purchase out of your business profits. In fact, you may find that you need to borrow either a portion of the cost or the entire amount in order to get the equipment that you need. There may even be times when business is so slow that you need to get some type of loan in order to pay your suppliers or even to just keep the electricity on and the water running. Of course, this is certainly not the situation that any business wants to find itself, especially if you are a sole proprietor and are the business. Of course, there are many different financial tools that you can consider: everything ranging from small business loans to business lines of credit and even to specialized business credit card. However, one thing you may not have considered is the humble small business cash advance.
One way to think about this particular instrument is to look at it as advance capital. That is, it can be used only for growing the business, whether that means hiring new people, moving to an office, getting equipment or improving things such as Internet speed. Under no circumstances should this type of cash advance be seen as something to use for your personal expenses or for frivolous things like eating out. When you turn on the TV, you’ll see many different payday loan commercials that are essentially cash advances on future earnings; a business cash advance is very similar. This is cash that you get up front, but is predicated on future income and things like future credit card sales. So, before you do this, you want to make sure that you have a clear plan as to how the money will be used and ensure that you know exactly what the expenses going to cost. You should be certain that it will not incur more costs as time goes on; the last thing you want to do, especially if you are a new business, just starting out, is to get yourself deeper into debt. Remember that, while there are such things as good and bad debt, when you’re just starting your own business, any debt could be considered bad, especially if you don’t have any clients just yet.
When it comes to things like business credit cards and especially small business cash advances, you really need to make a clear distinction between what will help your business immediately – things like new equipment or faster Internet – and what you simply want because it is new, shiny, or “in.” However, the last thing you want to do is to buy something simply because it seems to be the thing to do. You never want to follow the rest of the crowd in your industry, even though it can certainly be very tempting at times. Rather, you should watch for and learn from their mistakes, not go into massive amounts of debt just to seem equal.
Many new small business owners get caught up in that mentality, to their detriment. Of course, you do want to advance your business and you will, over time, need cash to do so, but there are a few things you need to consider before you decide to look for alternative business financing and get yourself an application for a business loan. And the key is that a small business cash advance is just another type of small business loan. You need to make sure that the things that you think you need for your business are truly necessary. It’s very tempting to want the best equipment and the best services right out of the gate. However, if you take a look at what you have and figure out the best way to utilize it, you can take out a much more manageable small business cash advance.
Even when you are able to afford the more expensive services or equipment, you want to make sure that you don’t go overboard, something which is very easy to do when you’re looking at various loan options. It is extremely easy to start off simply needing a new computer, but end up with a new monitor, router, software, and, of course, an extended warranty. One of the greatest things about a small business cash advance is that you get the cash instantly and if you needed to pay off all debts or old bills, this can be a great thing, but it can also lead to careless spending.
You can sometimes go overboard without even realizing it, becoming stuck for far money more than you originally anticipated. It’s very tempting to think of a small business cash advance, or really any type of business loan, as free money. After all, you get the money instantly and there’s really no restriction on how you can use it. So, if you find that what you need actually is less than the full amount, you use the rest of the money without a second thought. This is what gets most business owners into trouble. It becomes so easy to lose sight of the fact that they are basically taking future profits from their own business.
Instead, you should consider how this type of cash advance fits into your overall plan for the business. Especially if the amount is fairly significant, you want to review your business plan (you do have a business plan, right?) and make sure that you can not only afford the amount now, but also that you can afford it in the future. Make a plan that is flexible enough to account for things that change over time. Look at your overall business plan and at your future business goals and decide whether or not what you’re thinking of is necessary right now. If it can wait for a couple of months, that gives you time to get things even more organized. Remember: just like when you’re applying for a business loan, you don’t want to be hasty. Any rash decisions that you make today could seriously harm your business tomorrow.
A cash advance is one of those things that is easy to obtain but, if things don’t go as planned, may be something that you regret later. The last thing you want to do is to get that new piece of equipment or that higher-priced service and suddenly realize that you can’t afford it or, just as bad, that it was something that you didn’t need at all.
Remember that a small business cash advance, just like a business loan, line of credit, business loan online or any of the other tools that you can use, should be treated with respect – not only because it can potentially damage your business’ financial future, but also because, just like the payday cash advances you see advertised on TV, it is something that is very easy to get and very easy to abuse. However, using the right reasoning, a small business cash advance can be a great asset to your business. It can help you through rough financial times as well as allow you to get the software and tools you need to really take your business to the next level. As with any financial tool, it is all in how you plan to use it and how you plan for the future.