From retail stores and restaurants to landscaping and vacation rentals, many types of businesses experience seasonal ebbs and flows. When revenues fall into a seasonal slump, many business owners make cutbacks or sit idly by and wait for their customers to return. However, this is not your only option.
A merchant cash advance (MCA) can help you maintain your operations during slow times. You may even be able to make additional investments in your business, positioning yourself for even more success during the busy season.
What is a Merchant Cash Advance?
Simply put, a merchant cash advance is an alternative to a small business loan. It involves a financial agreement in which business owners agree to receive a lump sum of money upfront. In exchange, they pay back the lender with a percentage of their credit card sales.
Benefits of a Merchant Cash Advance for Small Business Owners
One significant benefit of a merchant cash advance is that there are no fixed monthly payments. Since MCAs are repaid based on a percentage of your sales, when your revenues slow down, your payments decrease. This can be a significant advantage for seasonal businesses that experience large fluctuations in their sales revenues.
It’s also fairly easy to qualify for an MCA. As long as you’ve been in business for the minimum required amount of time and you meet the sales revenue requirements, merchant cash advance direct lenders are likely to approve you even if you have issues with your personal credit score or a significant amount of personal debt. For example, Zinch offers MCAs to borrowers who have been in business for at least six months and have at least $10,000 in sales revenues each month. While a credit review is part of the underwriting process, it’s not a determining factor in the approval decision.
5 Ways MCAs Can Help During a Seasonal Sales Slump
Many small business owners appreciate the flexibility that comes with a merchant cash advance. Since there are no limitations on how you can use the funds, you’re able to allocate the money where it’s needed most or use it to set yourself up for future success. Here are a few ways an MCA can help you through a seasonal sales slump.
1. Cover Operational Expenses
Some businesses deal with seasonal downtimes by cutting back their opening hours, offering fewer services, and/or laying off staff. Unfortunately, these moves can frustrate customers, damage your business reputation, and destroy employee loyalty. The funds from a merchant cash advance can help you cover everything from utility bills and supplies to employee payroll, allowing you to keep your business running smoothly all year long.
2. Create a Cash Cushion
During the slow period, an unexpected expense can derail your business. If your cash flow is tight and you don’t have sufficient business savings, you may consider setting aside MCA funds to cover emergencies. If the air conditioner stops working, the roof starts to leak, or a piece of equipment breaks, you’ll have the peace of mind that comes with knowing you can take care of the problem right away.
3. Expand Your Business
If you’ve been thinking about opening a second location, purchasing a piece of equipment, or adding another product or service, the off-season can be the perfect time to make this move. Expanding during the slow period can help you minimize business disruptions and give you time to get up and running before you get busy again. Using a merchant cash advance to fund your expansion allows you to make the full investment upfront and pay it off over time without committing to a large, fixed loan payment.
4. Invest in Training
A seasonal sales slump typically means your employees are not as busy taking care of customers. Instead of cutting their hours, you may consider using the downtime to sharpen their skills. Using the funds from an MCA to invest in an off-season training program can make your staff more efficient or teach them how to offer additional services that can generate more revenue in the future.
5. Increase Your Marketing
When cash flow gets tight, marketing is often one of the first things to get cut. However, cutting back on your marketing during the slow season can strangle your revenue growth and put your business in a downward spiral. Instead, consider using a merchant cash advance to continue or even increase your marketing in the off-season. This can help set you apart from your competition and generate new opportunities for revenue growth.
The Bottom Line
For many small businesses, seasonal sales fluctuations are unavoidable. Taking advantage of a merchant cash advance can help you make it through the slow times and come back stronger than before. To learn more about your options, contact us at (714) 500-6622. You could qualify for up to $250,000 in just 24 hours.
