Owning a sole proprietorship has its advantages and disadvantages. As the sole owner 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 owning a sole proprietorship also puts the business owner personally at risk. In addition to receiving all the profits from the business, a sole proprietor also receives all the losses and bears all the risks of the business, which according to the Canada Revenue Agency, even extends to the owner’s personal assets, as a sole proprietor he does not have a legal status separate 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, your owner may be liable to repay the loan and your own personal property may be seized.
Acquiring business financing through a business cash advance virtually eliminates this problem. A merchant cash advance is a great option for a sole proprietor who doesn’t want to put extra strain on their personal assets. This is because, even though the business and its owner may not have separate legal status, merchant cash advance lenders have found a way to make only the business responsible for repaying the loan.
You may be wondering, “How can they do this?” It’s simple, instead of requiring a business owner to make loan payments, merchant cash advance lenders rely on credit card purchases processed by the business to make loan payments. I still don’t understand, consider this example:
Sarah is the sole owner of Sarah’s Cookie Shop. She has seen an unexpected increase in sales and is finding it hard to keep up with the customer demand for her. She realizes that she can solve her problem by making larger batches at once. But unfortunately, she doesn’t have the team to support batch augmentation. She decides to invest in an industrial oven and a food mixer, but after pricing the items, she is about $10,000 short. She does not want to take out a bank loan because she is unwilling to put her personal property as warranty.
Sarah decides to get a business cash advance. After she completes an application, she submits the requested documentation and it is approved, $10,000 is deposited into her bank account. During the process, Sarah was informed by the merchant cash advance lender that based on her 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 towards reimbursing her 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, keeping her loan payments adjusted as you go of the business.
Sarah did not have to provide any collateral and feels safe knowing her personal property is secure. And with the additional increase in sales Sarah’s Cookie Shop has seen since Sarah’s equipment purchases, her business 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 business cash advance can provide between $5,000 and $500,000 in funds for the advancement of your sole proprietorship.