Financial barriers and struggles are no stranger to small businesses. These challenges can many times have devastating impacts on these businesses leading to closures, downsizing, and restructuring. One of the most harmful financial issues for small businesses is high-interest debt that comes in the form of loans, credit cards, or merchant cash advances (MCA’s).
These high-interest rate options end up costing business owners more than they are worth. For example, MCA companies will “advance” future credit card receivables to the business and then take a percentage of the daily credit card sales. While this might seem like a great, quick short-term solution to access money faster, the reality is that the fees associated with MCA’s end up adding to 20-25% of a business’s daily sales volume to pay back the advance.
This adds up to a significant chunk of change which results in a high loss for the business. Which often leaves already struggling businesses in a more significant financial crisis than they were before. The same can be true for high-interest loans and credit cards. Many business owners are often left feeling like they have little to no options when it comes to accessing capital, especially during difficult times like the pandemic, which is why they end up turning to these options.
The reality is there are many alternative financing options available to small business owners in need of cash. While quick options like merchant cash advances might seem like a convenient, fast way to secure funds, it’s also one of the most expensive. We recommend doing your research and doing the math to explore other less risky options to shore up to make sure you and your business can thrive and succeed for the long haul.
Contact Prestamos to explore some of our financing options available to small businesses. Our loan options come with more than financial benefits; we also offer technical assistance, coaching, and mentoring to help your business succeed. We invite you to visit our website, prestamosloans.org, to learn more about our efforts and find an option that works for you and your business.