It’s a tale that’s being told throughout the world: a business owner took out a loan to boost their company, but can’t quite make the payments they thought they’d be able to make. It happens to everyone, including veteran company owners who have a great history of financial success. If you’ve never had this happen, you’re probably wondering what happens if you can’t pay your business loan.
- When it happens, it can be pretty terrifying – and many business owners start to panic and make bad decisions. A lot of companies will do “emergency sales” to try to egg on customers that want to buy goods to buy more than usual. This actually can help cover the costs of the loan, but in many cases, ends up putting them in even worse financial danger.
- Your business credit score (or your personal credit score) will take a hit. If you’re a business owner who can’t make ends meet, you can expect to see a near-instant drop in your credit score. This can make it harder to get a loan later on, or may even raise interest rates on credit cards you use to help fund the business.
- If it gets really bad, the bank can take whatever collateral you put down. Many business owners signed their homes as collateral, and this can lead them to become homeless. Some also have to declare bankruptcy because they can’t afford to survive without doing so.
- Being unable to pay bank loans can cause the business to go bankrupt. Banks can and will do what they can to retrieve their money.
Sounds terrifying, right? Well, depending on the situation, there may be a couple of ways to avoid having this happen to you thanks to merchant cash advances. Merchant cash advances act like loans, but are actually a purchase of future credit card sales at a discounted price.
How to Avoid Losing Your Company or Your Home Using Merchant Cash Advances
If you’re considering getting a bank loan, you might want to rethink that and opt for a cash advance instead. Cash advances have high approval rates, flexible payment terms, and also require no collateral to be put down. Moreover, if you have a slow week or just can’t make sales for a while, you won’t be required to pay the full amount. So, much of the headache of a traditional bank loan can be bypassed.
Business owners who had a temporary dip in sales can use merchant cash advances to “bridge” payments to the banks they owe money to. This prevents businesses from falling behind on payments and also will have minimal impact on profits and day-to-day business.
Overall, it’s important to remember that the danger of losing your business to a bank loan can be avoided. All you need is to have the right advance in hand to do so, and if you’re a company that needs that extra funding, we can make it happen. Call us today, and we can help you build a better tomorrow.