Business Cash Advance a Source of Finance
Business Cash Advance is a safe and reliable way from the viewpoint of meeting the requirements as well as of repayment. It is beneficial from the point of view of both i.e. the borrower and the lender. A borrower can fulfill his cash requirement and risk of holding the cash is eliminated and a supplier can earn a good yield on the sum borrowed. Cash is a liquid asset of the business enterprise. A business cannot operate without maintaining adequate to meet out its requirements. It is not possible for any business entrepreneur to maintain adequate cash for its requirements. So to fulfill this requirement funds are arranged through the various sources, there are many sources for Merchant Cash Advance. Working capital can be arranged by taking the advance. For arranging the working capital trade credit is treated a most suitable way of financing operations. Suppliers allow few days time within which the payment may also be made.
Finance can be taken from the Banks. It is the most reliable source of the finance. Bank charges some charge for the advance given. Banks may give the Finance in the two ways. Banks may give the option for the fixed interest rate and of the floating interest rate also. Creating a charge on the asset is the safest way for the business cash advance. It is secured loan. Most of the banks and financial institution provides secured loans by mortgage or pledge of the asset or the stock. The loans are sanctioned to business owners after some paper formality. It is the traditional way of arranging the funds.
Another important traditional source of the Business Cash Advance is from the financial institution other than the bank. These financial institutions are engaged in the business of providing loans. They charge a rate of interest on the funds borrowed which is the main source of their earnings. Merchant Cash Advance may also be arranged from the personal loan it is the safe way of financing. It is a type of the unsecured loans. It is very much useful in India. It is a challenging job to operate the business successfully. Cash is required for all the business activities. To purchase raw material, to pay for the wages, to pay for the expenditure and also for purchasing any fixed assets and many more other work There is the need for maintain working capital requirements. Working capital is the excess of the current asset over the current liabilities. The adequate working capital ratio should be maintained in the business.
This arrangement has become the primary choice of most of the business owners. It is beneficial in the contingency situation. It is very risky to hold huge cash in the business at all the time. Therefore, the requirement of taking advances has arisen out.
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