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Archive for March 4th, 2010

Being in business is tough, but being in business in a recession is even tougher. The reason for that is that it is much harder to generate sales and stay in business during a recession other than when times are good. If you are having trouble generating sales, accessing conventional credit sources, experiencing a slower business cycle, you should take a look at a merchant cash advance.

1. Flagging Sales

One of the first things to happen during a recession is that your customer base starts to shrink and getting new customers becomes harder than ever. The competition is fierce in the business market for that coveted customer that has disposable income available to spend. If you’re not at the top of your game in advertising and marketing strategies to draw in people who can continue to patronize your business, you will soon find you are out of business. In fact, during this recession, this did happen with large name companies as well as small businesses. It’s important to keep advertising and marketing your company, but that takes money up front. You may want to get a conventional loan to help you survive, but a recession is the worst time to opt for a conventional loan.

2. Conventional Lending Dries Up

It’s unfortunate that at the time you really could use a loan to survive, that’s when conventional sources of lending dry up. In a recession, bankers are not willing to lend unless you have stellar credit and a solid customer base. If you’re in the position of struggling and needing the money for your business to survive, that’s when you have to turn to other sources of credit, like merchant cash advances. They do not require a credit check and are based on your past business performance. If you’ve done well up until now and now see flagging sales, it’s time to step up to get a merchant loan so you can increase your advertising and have a little emergency fund to weather the storm.

3. Slower Business Cycles

Clients will not come in as often, and others will be 60 to 90 days late paying their bills. Some of your clients may even go bankrupt, making them unable to pay for services rendered. If you don’t have some cash in the bank to help keep your cash flow going in a slower economic cycle, you will end up having to cut employees or reducing your business goals. Neither of these are healthy for your business, and understanding how to balance slower cash receivables during down times with more profitable times is key to surviving a recession. A merchant loan is a type of loan that does just that. Since the lender only takes a percentage of each receivable, sometimes you pay less back when business is slow, and other times when business is more profitable you pay back more. This works very well in chaotic business cycles typical of most recessions.