How can you reduce the number of cash advances your business has ? Do you have too many daily mca payments to handle at one time ? Use these simple steps and tips and get them down to a number you can deal with – Fast!
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How to reduce the number of cash advances for your business:
1. Consider other types of business loans first.
Instead of immediately taking out an another advance, consider other options. Maybe your business can qualify for other business loan types.
Many businesses that have assets can qualify for a loan based on equipment or vehicles. The amount of the loan is based on a few factors, and one is the value of the equipment. In most cases, qualifying equipment will bring 40% to 50% of the wholesale value of the equipment. Vehicles will bring up to 40%.
Example to reduce the number of cash advances:
Your construction business has a front end loader worth $100,000, and a dump truck worth $60,000. A 40% loan to value (LTV), may bring a $40,000 offer on the front end loader, and $24,000 on the dump truck. These are usually monthly payments for 12 to 24 months or longer and can be used to cut down the number of mca’s immediately.
2. Consider renewals before new advances.
A renewal of an existing loan does not show up as a new or additional loan. Prospective new lenders may find out your business just received more funds, but they will have to dig. A renewal will not show up as a new account on your credit report. The additional balance may not show up for 30 days, if at all. The daily payment will increase and is the most likely way any lender sees that your business just took out more money.
Compare that with taking out a new advance instead of a renewal. A new advance will show up immediately as an extra daily debit in your business bank statements. Also, any new lender will know that the advance just began and you will have it for several months.
3. Payoff existing low balances on your own.
Try to payoff advances that have a very low balance before trying to get additional funds. Check and you may realize you only have a few payments left on an advance. Paying it off or waiting a few payments will eliminate that advance.
What is the benefit? Having one less position often makes you more likely to get approved, for a higher amount, and for a longer term.
4. Lender pays off low balances with new borrowing.
Your business may not have the cash flow to payoff low balances on another advance first. However, you can tell the mca company that you have a low balance on other advances.
The benefit is that your profile will be stronger because the advance company knows the balances are very low. They can either pay them off, or they know you will have them paid off in a few payments.
5. Track your advances: current balances; number of payment days left; percent paid.
Tracking your advances gives you several advantages in reducing your total number of cash advances. You will be more aware at all times roughly what your balances are, the number of payments left, and the percent paid down.
How will that help you? When it comes time to borrow, this information gets you better offers. If your balances are very low on some advances, paying them off puts you in a much stronger position when you apply for new funding.
Knowing your percent paid down tips you off when you are eligible for a renewal. Renewals can be better than money from a separate new lender.
6. Time the payment of your advances
Any new advance or renewal you take out can often be timed to payout on the same day as some of your other advances or loans. Check the dates of your existing payoffs and try to get the term of any new advance to match that date. The advantage is you will then have more than 1 advance payoff on the same day which lowers your risk profile much more all at once. Payoff 2 or more advances on one day!
7. Consolidate.
Combining the debt may be your best choice when you can handle the one consolidation payment. For a consolidation, your new payment will be 25% to 50% or more less than the total of your current payments.
The main advantage is for business’ whose current payments are eating up too much of their cash flow right now. This improves your monthly cash flow and also puts you on a sustainable path to pay off other existing debt.
FAQ: How to reduce the number of cash advances:
How can I reduce my number of cash advances?
Use a different loan type altogether. Consider renewals or pay off very low balances before your business needs new money. Use better tracking to help time your payoffs. Look at consolidation possibilities.
What can I do if I am stuck with the advances I have?
Stick to the plan outlined here even if you cannot reduce your numbers immediately. You will be able to get the number down quickly through payoffs and the steps outlined onpage.
How can my business borrow with too many advances?
Do not try to borrow with a much smaller advance without considering other options. Follow these tips outlined immediately. Other loan types or waiting may be better. Contact us and we will help you organize your reduction effort.
Conclusion
Lowering the number of mca’s your business has is not as difficult as it first seems. Set up a plan weeks or months before you need funds.
A business that knows it will need to borrow within a few months should get on a systematic plan now. Many of the tips outlined here will help your business reduce the number of advances.
Many business owners just keep taking out one mca after another and end up with several before they realize it.
Get started now and keep your advances down to just 1 or 2 with a simple plan.