How MCAs Can Help in Your Off-Season

MCAs In The Off Season

Many seasonal businesses use MCAs (merchant cash advances) to gird themselves for a heavy sales period. The money is used for everything from ordering more supplies, hiring temporary staff, marketing, and everything else the business needs in order to maximize sales. But can MCAs work for businesses in the off season as well?

MCAs to Sustain Seasonal Businesses

Many seasonal businesses – be it retail, restaurants, or hotels – see upwards of 70% of their yearly business during a specific season. This means that business owners have to budget in advance for how that revenue will sustain operations and cover salaries for the following months. This can put a big strain on cash flow, as all of the seasonal revenue goes to expenses or gets filtered back into the business, with very little left over after a few months. After a heavy sales season, many business owners use MCAs to get an injection of working capital to offset costs when sales are light.

MCAs Offer Flexibility

For new and smaller businesses, many entrepreneurs end up applying for bank loans to get the working capital they need to sustain their companies. The major drawbacks to bank loans are that the businesses end up taking on debt, and businesses are beholden to a strict payment schedule. This can leave entrepreneurs scrambling during a light sales period just to make a loan payment on time, which can in turn place a huge strain on cash flow. On the other hand, MCAs are repaid over a period of a few years, and those payments are made as a percentage of each credit card transaction that customers make. This means that MCAs are repaid even during lighter sales seasons, which does not hinder cash flow at all. Additionally, MCAs are considered a sale on future receivables, which means they do not register as debt on the balance sheet.

MCAs for Off-Season Growth

By using MCAs in the off season, businesses can use the money from sales to to build up and out, in order to make the busy season even bigger. By using the boost of working capital during a slow sales period to prepare for the high traffic season, businesses can prepare and position themselves to take on even larger sales and customer orders.

While MCAs can help a seasonal business run smoothly during the busy season, they can also be used to help a business grow to the next stage of success while simultaneously offsetting expenses.

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