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Insights and Expertise
ChapterTitle

How cash advance can Investing for success

fuel business growth To fully leverage the benefits of a cash advance, businesses
need strategic plans for using the funds. Before applying
for an advance, your merchants should identify areas in
By Elie Y. Katz their businesses with the most potential for growth and
profitability. For example, if certain products or services
National Retail Solutions (NRS) a particular merchant sells are consistently in high de-
mand, using a cash advance to increase inventory could
f you're new to the payments business, this article significantly boost sales. Similarly, if the merchant wants
will serve as a short primer on merchant cash to expand operations to a new location or launch an ecom-
advance products. If you're a seasoned pro, it will merce site, a cash advance could provide the necessary
I provide a quick refresher on the many benefits capital to turn those plans into reality.
of cash advance products.

How does a cash advance work? The key is to focus on investments that will generate a
strong return, allowing your clients to repay advances
A cash advance provides a business with a lump sum while propelling their businesses forward comfortably. By
of capital upfront, typically within 24 to 48 hours of being strategic and proactive with cash advance, you can
approval. Unlike a traditional loan, recipients will have help your merchants position their businesses for long-
no fixed monthly payments or extensive application term
requirements. Instead, they will agree to remit a small success.
percentage of future sales (usually 5 to 15 percent) to the When is a cash advance right?
provider daily or weekly until the advance is paid back in
full, plus a factor fee. This performance-based repayment A cash advance can be a helpful funding tool in a variety
model aligns with cash flow, allowing your merchant to of situations:
pay more when sales are strong and less during slower
periods. • Purchasing inventory to meet seasonal demand
• Expanding to a new location or sales channel
To qualify for a cash advance, providers primarily assess • Upgrading equipment or technology
the strength of the applying business's deposits rather
than focusing on collateral, financial projections or perfect • Launching a marketing campaign to boost sales
credit. Generally, a business will need to average at least • Smoothing out cash flow during slow periods
$15,000 in monthly deposits, have been in business for at The key is to have a clear plan for how the funds will he
least six months, fill out a simple application, and provide
recent bank and credit card processing statements (if increase revenue and profits, positioning a business to re-
pay the advance successfully. Cash advances work best for
applicable). Once approved, a merchant can use the funds
for any business purpose. The speed and simplicity of businesses with consistent sales that occasionally need an
influx of working capital to grow and thrive.
the funding process are key advantages of cash advances
compared to traditional loans, making it easier for a Benefits and considerations
broader range of businesses to secure the capital they need
to grow and thrive. Cash advances offer several advantages compared to other
funding options:
Adapting to your merchants' needs
• Fast funding, often in 24 to 48 hours
One of the most appealing aspects of a cash advance is its • Simple, streamlined application process
flexibility. Unlike many traditional loans with restrictions
on how to use the funds, a cash advance can be used for • Flexible use of funds for any business purpose
virtually any business purpose. This flexibility empowers • Emphasis on sales performance versus credit score
a business owner to allocate the capital where it's needed • Repayment that scales to match sales
most. Whether retailers in your portfolio need to purchase
inventory, hire additional staff, upgrade technology or However, cash advances aren't the right fit for every busi-
launch a new marketing campaign, a cash advance allows ness. Be sure your merchants carefully evaluate the terms,
them to invest in their businesses as they see fit.
fees and total cost of capital. With the right cash advance,
they can invest in their future success starting today.
This versatility is particularly valuable in today's fast-
paced business environment, where the ability to adapt
quickly to changing circumstances can be the difference Elie Y. Katz is founder, president and CEO at National Retail Solutions
between success and (NRS), https://nrsplus.com. Contact him by phone at 201-715-5179 or by
failure. email at ekatz@nrsplus.com.

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