When you’re still starting in the business, it’s acceptable that you may be short on cash. Your capital may not yet be enough, but you know that you’ve got an excellent business idea. So, you need the assistance that you can get to cover the start-up cost of your business. Of the many forms of cash assistance or lending products that you can choose from, one of the most beneficial for you would be the merchant cash advance loan.
In the long run, however, once you’ve started to benefit from the merchant cash advance, there will come a time when you’ll want or need to stop paying for this loan. Especially when business is already doing well, you wouldn’t want to keep yourself tied up all the time.
That said, here are some of the best ways to stop paying for merchant cash advance:
1. Replace Your MCA With A Term Loan
When you’re using the cash advance for business purposes, one of the best options that are out there for you is a term loan. Generally, this stands to be a better option because a term loan can give you more favorable terms. For instance, unlike a merchant cash advance, it’s going to be easier for you to manage your cash flow with a term loan.
Here are some of the areas where the conditions of a term loan end up to be more favorable:
- It has a more extended repayment period.
- It has lower interest rates.
- Its loan payments are done monthly, not daily.
If you’re not very familiar with the different kinds of term loans that are available to you, it helps also to seek the advice of business experts, like the ones from Business Debt Law Group. In doing so, you’re guaranteed that you’re always making the right financial decision for your company as you try to stop paying for your merchant cash advance.
2. Start With Paying Off The Advanced Amount
One of the most apparent and fail-proof ways for you to stop paying merchant cash advance is to start by paying off the advanced amount. In simpler terms, this means using whatever cash on hand you have or can borrow sans the interest to pay off whatever amount was loaned to you through the merchant cash advance funding. Through this, you won’t have to worry about the interest anymore.
Here are some ways for you to pay off the advanced amount fast:
- Get an asset-based loan or a term loan
- Borrow interest-free money from a family member or a very close and trusted friend
- Borrow from your personal savings account to pay off the loan
- Use business savings to pay off the loan
3. Sign Up Instead For An Asset-Backed Loan
In simpler terms, an asset-backed loan refers to a loan that’s backed up by whatever form of collateral it is that you can give. For instance, you’re using your business assets to back up the loan. So, in the event that you won’t be able to pay off the loan, the bank or lending institution has a guarantee of what to take instead as their collateral.
With asset-backed loans, these are less risky for the lenders, simply because they know they’ve got a property or asset to confiscate, in the event of default. Hence, these loans also have more favorable terms. Generally, with an asset-backed loan, you can enjoy a longer repayment term and lower interest rates than that of your merchant cash advance. So, here, the key is in using your asset-backed loan to refinance your merchant cash advance, such that you can finally get out of it.
4. Increase The Sales Of Your Business
The more that you can increase the sales of your business, the more you are eligible for higher payments of your merchant cash advance. Rather than paying only the amount that is due to you every month, pay more so that you can eventually shorten the term of your merchant cash advance.
A merchant cash advance is usually given against the sales rate of your business. When you increase your sales rate, then, you can pay off the merchant cash advance faster. Not only does this increase the profit of your business and the chances of your business to thrive against the competition, but it also enables you to lay off the merchant cash advance debt more quickly.
Here are some of the best ways for you to increase the sales of your business:
- Practice the technique of premium pricing
- Increase the price of your products, but carefully, such that your customers will still be able to afford it
- Create new service lines for your business
Without a doubt, a merchant cash advance is one of the fastest and best ways for you to obtain funding for your business. Especially when you need quick cash, this is the best option for you to go for. Plus, it has some of the most flexible loan requirements. But, in the long run, it also pays for you to eventually put yourself out of this debt and start paying it off. It’s better to continue running your business sans any liability at all. With these tips enumerated above, now you know of so many options on how to start paying off this debt.