subject: Should You Apply Now for a Business Cash Advance [print this page] Should You Apply Now for a Business Cash Advance
There are some good reasons and some not so good reasons to apply now for a business cash advance. We will be discussing a few of these better reasons and why they could be good reasons. In general a business cash advance is a short-term loan with a high interest rate so they have a time and place. The purpose of today's discussion is to give you a better understanding a when an "expensive" loan such as an advance may in fact be your best option.
If your business falls under an emergency and something is taken out of commission that is vital to the day-to-day operations of your business, perhaps a critical piece of machinery that is used to make a high selling item. Then you need to factor in interest on a cash advance against the loss of profits from the lack of this tool. If you must borrow $10,000 for a cash advance and you will pay $1000 in interest in the month that the advance is due, but not having the item costs you $5,000, you should apply now for a business cash advance. This is not an ideal situation of course; the better option would be to keep the equipment well maintained or to avoid failure in some other way. But, if you are in the middle of an emergency it is important to keep perspective. Spending $1,000 that you don't want to spend is better than spending $5,000.
Similarly if you run into a cash flow issue, which prevents you from making payroll for example, it makes sense for you to apply now for a business cash advance to cover payroll rather than lose the employees. This is because of the high cost of retraining employees. Not to mention the hassle of conducting interviews. On the other hand, if you use a cash advance to cover unnecessary expenses, or in an attempt to keep your business running with no clear plan of action to regain profitability, this is not a good use for it. Remember that they should only be used for specific short term issues, which have solutions pending to them. If you simply need the money to continue your operations you should ask if you are just trying to stay in business when perhaps you should not. It is important to not get so emotionally attached to your company that you borrow money when perhaps you should be trying to gracefully close up shop.
