As some states begin to lift restrictions and businesses reopen, entrepreneurs are looking to make up for lost time after having their operations limited or halted completely. However, to get operations up and running quickly without taking on major debt, businesses need a flexible source of financing.
Securing Traditional Loans is Difficult
Banks and other traditional lending channels are tightening their requirements for borrowers. This is not unusual, following a cycle that many business owners remember from the Great Recession of 2008. Every time there is economic uncertainty, traditional lenders raise their requirements to offset risk and place the burden on borrowers. Lenders are requiring higher credit scores and more collateral from borrowers seeking financing, while lowering the amounts borrowers receive from loans. Since many business operations were effectively placed on hold for a month or longer during city and state lockdowns, they may not have the credit ratings, collateral, or sales history to qualify for traditional loans.
At the same time, businesses want to minimize their own risks, and taking on extra debt can place a major strain on cash flow. High interest rates and fixed monthly payments work against the goals of businesses in every sector that are trying to maximize revenue during the initial recovery phase of the COVID-19 pandemic. Businesses need flexibility and accessibility without prohibitively high requirements.
Flexible Financing for Businesses
One solution for businesses to get a head start during the recovery phase is a cash advance. Cash advances offer several benefits that traditional loans do not. First, cash advances are accessible and are not dependent on credit scores or collateral. They are structured around a company’s sales history and provide an injection of working capital without placing debt on the books. Second, cash advances offer flexible repayment. Unlike traditional loans with their fixed monthly payments, cash advances are repaid in proportion to sales. When a customer makes a purchase and pays with a credit card, a small percentage of the sale goes towards repaying the balance on the advance. This allows businesses to maintain a healthy cash flow without repayments placing a strain on finances. Third, cash advances are reusable. While traditional loans are single-purpose and single-use, cash advances can be used in succession to provide working capital for businesses. Additionally, cash advances provide discretionary financing, so the funds can be used for inventory, paying down liabilities, equipment, advertising, or anything else a business needs to stay successful.
Get the Financing You Need
If your business needs extra working capital to get a competitive edge while your state reopens, contact Web Finance Direct. We specialize in working capital solutions for businesses across all industries. We can arrange a merchant cash advance for your business quickly and with minimal paperwork. At Web Finance Direct, we offer a wide range of financing solutions to help businesses remain competitive and successful as our country pulls through our current challenges.