Merchant cash advance for sole proprietorship

Owning a sole proprietorship has both its advantages and disadvantages. As the sole proprietor of a business, a sole proprietor has the authority to make any and all decisions related to the business; from the type of business to open, to the location of the business, the name of the business and any other decision that needs to be made.

But being the sole owner of a business also puts the business owner personally at risk. In addition to receiving all profits from the business, a sole proprietor also receives all losses and assumes all risks of the business, which according to the Canada Revenue Agency even extends to the owner’s personal assets, as sole proprietor does not have a separate legal status from your business.

These facts make applying for a business loan a very risky undertaking for a sole proprietor, considering that if the business fails, its owner may be liable for the loan and their personal property may be confiscated.

Acquiring business financing through a business cash advance virtually eliminates this problem. A merchant cash advance is an excellent option for a sole proprietor who does not want to put additional pressure on their personal assets. This is because although the business and its owner may not have a separate legal status, merchant cash advance lenders have found a way to hold only the business responsible for repaying the loan.

You may be wondering, “How can they do this?” It’s simple, rather than requiring a business owner to make loan payments, merchant cash advance lenders rely on business-processed credit card purchases to make loan payments. Still don’t get it, consider this example:

Sarah is the sole owner of Sarah’s Cookie Shop. You have seen an unexpected increase in sales and are finding it difficult to keep up with the demand from your customers. You find that you can solve your problem by making larger batches at a time. But sadly, you don’t have the equipment to handle the increased batches. You decide to invest in an industrial oven and food mixer, but after pricing the items, you are about $ 10,000 short. You do not want to take out a bank loan because you are not willing to put your personal property as collateral.

Sarah decides to get a merchant cash advance. Once you complete an application, submit the requested documentation, and it is approved, $ 10,000 is deposited into your bank account. During the process, Sarah was informed by the merchant’s cash advance lender that based on the previous month’s credit card sales and the loan amount she would receive, only 20% of her future credit card sales would be deducted as a refund of your merchant cash advance. . Now, every time customers make credit card purchases at Sarah’s Cookie Shop, a small percentage of the sale is deducted and goes toward paying their merchant cash advance. Whether Sarah processes $ 5,000 in credit card sales on any given day, or $ 500, only 20% of her credit card sales go toward payment, making her loan payments match. the progress of the business.

Sarah did not have to provide any guarantees and feels safe, knowing that her personal property is safe. And with the further increase in sales Sarah’s Cookie Shop has seen since purchasing Sarah’s equipment, her merchant cash advance is paying off faster than she expected.

If you own a sole proprietorship, you can also find financing for your business without worrying about the safety of your property. A merchant cash advance can provide between $ 5,000 and $ 500,000 in funds for the advancement of your sole proprietorship.

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