When Does My Retail Business Qualify for a Re-Advance?

Working capital is essential for any business. Without it, you can't seize opportunities or navigate challenges effectively. As a savvy entrepreneur, you recognize that using an initial cash advance wisely can qualify you for a re-advance, ensuring a steady cash flow for long-term growth.

What’s the Difference Between a Cash Advance and a Re-Advance?

A cash advance allows a business to receive up to 100% of its monthly card turnover as a working capital injection. The repayment is made through a fixed percentage of future card transactions until the amount is fully paid off.

A re-advance comes into play once 70% of the initial cash advance has been repaid. This process can occur even faster than the first advance because all the merchant’s details are already on file. Only a few updated statements are required for additional funds to be made available. If the merchant hasn’t taken the full amount initially qualified for, they can also "top up" their cash advance at any point during the funding cycle. Ryan Cohen, Chief Partnerships Officer at Merchant Capital, states, “This is an extremely popular product as 80% of our customers re-advance with us, given the benefits of our unique working capital solution.”

How Should My Business Use a Re-Advance?

As fellow entrepreneurs, we believe you understand your business best. While we don’t dictate how funds should be used, we encourage spending on growth-enhancing opportunities. Consider whether the funds will help grow your business or simply fill gaps. This decision is critical, as it ensures that the initial investment generates consistent sales, helping you repay the initial cash advance and qualify for a re-advance.

A Lesson from the Pros

Lebo Magwa, owner of Fix Auto, aimed to become the preferred service provider for insurance companies needing quick panel-beating repairs. To achieve this, she needed to purchase expensive equipment to meet insurance company standards. Recognizing this as a strategic growth opportunity, Lebo used her Merchant Capital cash advance to buy the necessary equipment within 48 hours of receiving the funds. This decision paid off; shortly after, her business became a key service provider for one of South Africa's largest insurers. Once she repaid 70% of her cash advance, she qualified for a re-advance. Understanding the value of the first cash advance, Lebo eagerly took the re-advance to boost her cash flow for daily business expenses. Today, Fix Auto is thriving with 32 employees, a larger facility, and a growing reputation as a top supplier to insurance service providers in South Africa.

The Bottom Line

Building a business requires ambition, vision, and strategic support that benefits you in the long run. With the right mindset, you can leverage cash advances and re-advances to maintain a steady flow of working capital, fueling your growth ambitions over time.

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