Having access to growth capital is essential for businesses to take their operations to the next stage of development. However, businesses that are beginning to experience growing pains don’t always have the necessary capital to make the next leap. Drawing on internal revenue often puts a huge strain on cash flow. Many business owners also shy away from the idea of taking out bank loans for growth capital because putting more debt on the balance sheet is counter-intuitive to being able to enjoy the rewards of growth in the first place.

Fortunately, there are options available which give business owners access to growth capital without having to take on massive amounts of debt.

Growth capital from MCAs

Merchant cash advances (MCAs) give businesses a boost of capital which – unlike bank loans – can be used for anything from stocking inventory, marketing campaigns, and hiring on new staff, to getting specialized equipment, rolling out new products, and everything in between. MCAs are secured through commercial finance professionals, and the advance is repaid as a percentage of credit card transactions, spread out over an agreed upon time period (typically three years). This gives business owners the ability to use growth capital without having to worry about a looming (and strict) payments schedule, unlike bank loans. MCAs are also considered to be sales on future receivables, so businesses do not take on additional debt on the balance sheet. This is ideal for any business that processes credit card transactions at a point of sale.

Purchase Order Financing

Purchase order financing is almost tailored for businesses that are poised to take on larger customer orders without sacrificing cash flow or daily operations. When a large order comes through the door, businesses use purchase order financing to cover the cost of filling that order. When an invoice is created, the customer then pays the party that provides the purchase order financing. That company, in turn, subtracts the amount of financing, plus any agree upon fees, and delivers the remainder to the business in the form of revenue. By using purchase order financing, businesses are no longer caught in the dilemma of wanting to grow, but remaining unable to take on larger orders due to a lack of capital.

Commercial Financing

With restrictive lending policies and products that only favor well-established companies, many small business owners are turning to commercial finance professionals for growth capital. The world of commercial finance offers the programs mentioned above, plus many others that do not require businesses to take on debt, nor do they directly impact credit ratings.

If your business is in need of growth capital to make it to the next stage of success, check out some of the available options that can allow your business to generate more revenue without having to apply for traditional bank loans.