If you know anything about merchant cash advances, you know that there are a few criteria you need to meet in order to be qualified to benefit from this type of financing. First of all, you have to own a small business, and then – the most important criteria, perhaps – you need to have a lot of credit card and debit card transactions.

Why? Because of the way this financing method is set up, repayment is not made in the traditional way, in fixed, regular instalments, like you would repay a loan. Instead, the repayment is made exclusively from the income you make from these card transactions. In addition, the repayment is made in small percentages of this income – weekly, or even daily.

Knowing this information, it becomes obvious that some businesses will be more suited to business cash advances than others, so let’s take a look at what kind of businesses may benefit, and is yours one of them, or are you better off looking for a different form of financing?

What Kind Of Businesses Can Use Merchant Cash Advances?

As we mentioned before, in order to successfully – and relatively effortlessly – fit into the criteria for this kind of financing, you need to own a business that sees a lot of daily traffic. And not just any kind, but customers who are happy to pay by card for your products or services. That narrows it down to a few kinds of establishments who will thrive and make the most out of this type of lending:

Restaurants

There’s a reason why there are so many restaurants opening, and why they are some of the few businesses that make it through recessions and difficult economic times. Whatever happens and come what may, people have to eat. And that can be the knowledge that saves you and your business.

You’re always going to have customers and a lot of them will be using their credit cards to pay. Especially if you’ve got large parties of youngsters, chances are they each pay their way with their own credit cards, scoring you more credit card or debit card transactions. If you run a restaurant, or are planning to run a restaurant, a merchant cash advance can be a pretty good bet.

Bars & Coffee shops

Just like restaurants, bars and coffee shops can not just be real money makers, but they are also excellent sources for card payments. They are, perhaps, some of the businesses that bring in the most foot traffic and sales. Just think of all the morning rushes and the happy hours where workers come in for a quick cup of coffee, or a few drinks to blow off steam at the end of a hard day at work. All those orders add up and the credit card transactions help you pay off the advance you took initially.

Nail salons & Hair salons

The same goes for hair salons and nail salons – nail technicians and hair stylists see multiple clients every single day and as long as their appointment books are full, you are pretty much guaranteed to have plenty of card transactions. These sort of grooming services will always be used, even in the hardest of times because, people need to have their hair cut, and that’s usually not something they can do for themselves at home. They need a professional to do it, so that’s steady, guaranteed income in your pocket.

Retail stores

We can’t leave out the biggest money maker of all, perhaps – retail shops. If you own a small boutique, a corner shop, or anything else like that, you probably see customers day in, day out. Depending on what you’re selling and where you’re situated, you may see more or less traffic, but the same principle applies: people need to shop for these products, and you are offering them.

Here, just like with services described above, customers will often pay with credit and debit cards, especially if we’re talking about non-necessities and luxury purchases, such as clothes or shoes, perfumes, cosmetics, etc. This is often the type of shopping people just put on their card, as opposed to paying in cash, so you can rest assured that’ll work out nicely for your merchant cash advance.

As you can see, a merchant cash advance can be a wonderful financing solution for small businesses. But are all small businesses suited to this kind of lending? Not all of them will be, but if you get a lot of traffic and stand to process a lot of credit card and debit card transactions, it may be a good option for you. Please be aware that store cards do not fit into this category. If you’re a small business owner with a restaurant, coffee shop, nail salon, or something like a retail store, you may be able to benefit from merchant cash advances.