Many businesses are increasingly choosing to start doing business online either as an additional avenue for revenue or as their sole avenue for revenue. With more and more consumers turning to the web rather than traditionally seeking out products and services within their area it is become more important for online businesses to be able to adapt to a constantly changing landscape. Alongside the general costs of doing business, online businesses often have to pay for numerous costs associated with their online resources including the costs of servers, bandwidth, and access to the Internet along with their online communications.
When it comes down to it some web businesses can find it particularly difficult to receive financial assistance during harsh times. With the instability of how business is done over the Internet, it can be particularly daunting for a business to adapt to the increasing costs of online services and equipment. In the cases where a small business loan is not possible, a merchant cash advance service can be the next best alternative.
Finding a Need vs Having a Need
When entrepreneurs look at financial assistance there is a common misconception which needs to be addressed. With the rise of investors injecting money into online businesses it is important to understand the difference between finding and having a need. Often businesses search for new uses of capital that they do not properly earn through the course of doing business. This is often referred to as finding a need for their business. Having a need involves the need naturally occurring through the course of business.
Many businesses find new online services or resources that could help make things easier on their business. It could provide their business to offer new services or benefits to their current customers in addition to new customers. While these opportunities are particularly interesting to business owners, many businesses make the flawed assumption that while it is something they need to expand into, it is not a need of the business at the current time.
At the opposite end of the spectrum are those needs that arise when a business is gaining and influx of customers but needs to be able to expand to more servers or integrate new services within their offering the account for the increase in interest. In this case, this is having a need in which a need naturally arrives for the business.
While merchant cash advance loans online can provide a business with an opportunity to expand into new areas and potentially increase their revenues, a merchant cash advance is best suited for the needs which naturally arise for a business which are absolutely vital to the operation of a business. The major difference between both uses of a cash advance involves whether revenue is possible without that funding. A business must be able to survive in order to be able to expand.
The Cost of a Merchant Cash Advance
Obtaining a merchant cash advance is not necessarily cheap. While small business bank loans are an opportunity for a business to receive a low-interest loan from an established financial institution, a merchant cash advance is a private contract based on a business’s history of established credit card transactions. Rather than paying back a fixed amount over a period of time, a merchant cash advance is paid back based on daily credit card transactions from clients over a period of time. While a merchant cash advance generally doesn’t involved putting up collateral, it is important for a small business to understand that a merchant cash advance is also a more expensive form of financial assistance.
A merchant cash advance involves a premium for the use of the cash advance as opposed to a straight interest rate from the bank. The premium could be a large percentage in addition to the original loan. It is important to understand your financial obligations to the merchant cash advance company prior to starting the service.