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How Can Businesses Get a Cash Advance in Canada during the Pandemic?

The coronavirus has undoubtedly taken its hold on nearly every country in the world. Unfortunately, Canada is no exception. Small Canadian businesses are struggling to make ends meet, pay their employees, and keep inventory rolling in, all while the new standards of social distancing are becoming the norm. With money tight and no real end to COVID-19 in sight, many small businesses are scrambling to come up with the needed money to keep their company running.

This has left many owners wondering if their Canadian business can get a merchant cash advance during this pandemic. We’ll take a quick look at this question and the steps to take if you are one of those businesses needing a bit of extra help for your bottom line during these unprecedented times.

What is a merchant cash advance?

Merchant cash advance lenders provide fast cash loans to your business for a part of the profits from your future sales. Instead of making fixed payments each month, you’re required to make weekly, or sometimes daily, payments until the advance are paid off in full, including any additional fees. 

The advantage of a merchant cash advance is that your repayments are based on your daily or weekly credit card sales. What this means is that if your sales are down, you’ll be required to repay a lesser amount as opposed to if your sales are up to during a certain timeframe. Whether you’re on a daily or weekly repayment schedule, you won’t owe more than you’ve earned in any given time period.

What is needed for a Canadian cash advance? 

As we’ve just covered, small businesses in Canada can qualify for a merchant cash advance. There are several documents you’ll need to get together before you contact the lender. Some of the items asked for by your lender will be your basic business information, your merchant ID number, any recent bank statements, your government-issued photo ID, and a voided check. Keep in mind that you’ll also need a business bank account in order for the lender to deposit the advance. 

What if I can’t pay back my merchant cash advance?

Unfortunately, there may be a time where your small business may be unable to repay the merchant cash advance. Fortunately, there are options for this. You have the option to replace the cash advance with a term loan or get an asset-backed loan. If you have more than one cash advance loan, consider consolidating them into one lump sum. You may also be able to renegotiate the terms of your advance. As a last resort, you may need to restructure your business or file for bankruptcy. 

Conclusion

If your Canadian business is struggling during this pandemic and you’re looking for a cash advance to help out with bills, employee paychecks, and inventory, a merchant cash advance may be the answer. However, consider all of your options before making a commitment. You don’t want to over-extend your company and end up losing everything. Make your decisions wisely and plan your budget accordingly.

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