Know Your Goals

Before receiving the funds, have a clear plan for how you will use the money. Outline your business goals and how the cash advance will help you achieve them. Whether it’s purchasing inventory, equipment upgrades, marketing campaigns, or general operating expenses, identify your top priorities.

Create a Budget

Once you receive the merchant cash advance, create a detailed budget for how you plan to allocate the funds. Break down costs into line items like inventory, equipment, marketing, payroll, rent, etc. Having a budget prevents overspending and ensures the money goes where it will have the biggest impact.

Pay Down High Interest Debt

If your business has any high interest credit card balances or loans, consider paying those down first. This will save you money on interest and free up cash flow going forward. Just be sure to have a plan to pay off the merchant cash advance as agreed.

Invest in Growth

Look for ways to invest the funds that will grow your business. Purchasing high demand inventory, updating equipment to boost production, expanding your physical location, hiring staff, and implementing marketing campaigns can all drive growth. Focus spending on long-term gains.

Split Funds Between Needs

Don’t put all the money toward one single thing. Consider dividing it between business essentials like inventory, immediate needs like payroll, and growth opportunities like marketing. Spreading it around provides balance.

Hold Some in Reserve

Don’t spend the entire sum right away. It’s wise to hold back 10-20% in your business savings account as a reserve. This provides a cushion in case of unexpected expenses and ensures you can still make the scheduled payments.

Make Payments On Time

Be diligent about making your fixed weekly or monthly payments on time. Failing to do so can allow the lender to take more via ACH debit and damage your credit. Staying current is critical.

Track Spending

Keep careful track of what you spend the funds on. Save receipts and record expenditures under your budget line items. This ensures transparency and accountability in the use of the capital infusion.

Following these tips will enable you to maximize the value of your merchant cash advance while minimizing risk. Invest the money where it can grow your business for the long haul.