It’s not uncommon to be strapped for cash when you start a new business venture, and one way to remedy the need for money is to consider a merchant cash advance. There are many upsides to merchant cash advances. However, as your business grows, you may be interested in getting out of the cash advance.
Three ways to get out of a merchant cash advance
- Pay for it. This seems like the most obvious answer, but you can pay it off. It may seem impossible at first, but considering different resources, such as asking a family member for a loan, dipping into your savings, or selling assets you aren’t using, may be a great way to offset the loan’s balance.
- Replace it with a term loan or asset-backed loan. Another option is to consolidate the loan by changing it to a term loan or an asset-backed loan. A term loan can have an extended repayment, a lower interest rate, and the loan payment will be due monthly and not daily. An asset-backed loan, on the other hand, is exactly how it sounds. In an asset-backed loan, you use your business assets to back up the loan, so if you cannot pay off the loan, the bank will take your asset instead.
- Increase business profits. Finally, you can increase your business profits. Usually, a merchant cash advance is given against the sales rate of your business. When you can increase the sales rate, you can pay your advance faster. This is not only great for paying off your merchant advance, but it also can help your business thrive against the competition.
If your business is strapped for cash, there’s nothing wrong with investing in a merchant cash advance, but as your business grows, you may want to get out of this type of loan. The easiest way to get out of a merchant cash advance is to pay it off, but you can also replace it with a term loan, an asset-backed loan, or increase your business profits.