We see many different types of companies here at Cash Federal and one mistake A LOT of business owners make is they apply to borrow money too late.

This week we funded $25,000 to a retail shop that I think serves as a perfect example of WHEN to borrow funds.

Jake (my alias for him) had increased his sales staff last fall anticipating the growing consumer demand for the holiday season. He did well but unfortunately those added expenses where a drag on cash flow in the first quarter when sales dipped more than he expected. That cash flow crunch caused some difficulties and he had to personally juggle funds causing a few late payments on his PERSONAL credit cards and his mortgage. Jake was never late on his business accounts, but seeing sales rebound he came to Cash Federal to borrow some funds.

We were able to fund $25,000 which Jake used to pay his personal expenses and give him a cash cushion for the summer knowing that he will repay the loan prior to Q4 this year with the increase in sales this summer.

Far too often a small business owner applies to borrow money too late, after their personal AND business credit is impaired. We have programs to help these business owners also, however there are less options and choices for them.

In this case, Jake’s decisive moves to insure his business SAVED him money, rather than borrowing too late. Don’t forget, if you apply and are approved you can still decide to NOT take the funds later!

Keep growing America!!!

We have created this blog to explain the pros and cons of using a merchant cash advance.  This is a form of financing that can be used by small and medium sized businesses.  Typically a merchant cash advance is structured as an asset purchase.  The thing being purchased is typically future credit card sales.  In the coming days and weeks, we will point out the advantages and disadvantages of using this business loan alternative.