Could Cash Advances Put Your Business Behind?
(Inc) — It’s no secret that small businesses are looking for alternative financing sources. A Pepperdine Universityreport released in July found that 61 percent of banks said they were turning down tradtional loans that they might otherwise have granted because of changed regulatory practices and the current economic climate. Enter merchant cash advances. While technically not a loan, a cash advance is a lump sum (usually less than $150,000) given to a business owner in exchange for a specific share of future credit and debit card sales. And thanks to quick approval and almost instant access to capital, they’ve recently become a go-to, albeit risky, source for some small business owners. The practice, which is mostly unregulated, drew attention in 2008 and 2009 when credit dried up. At the time, the number of providers exploded to around 50 (up significantly from the dozen or so at the beginning of the decade), and some small business owners complained of fly-by-night advance providers charging usurious rates.