Businesses most often use a merchant cash advance for payroll during a timing gap, inventory, equipment, expansion, marketing and getting ahead of a busy season. What these have in common is a payback you can see: the money funds something that brings revenue back within the term of the advance, up to 10 months with InstaFunders. It's a poor fit for covering ongoing losses, long-life assets and personal expenses.
The rule that applies to every use
An advance is the purchase of part of your future sales, delivered back through daily or weekly payments over months. So before you decide how to spend it, ask two questions: will this bring in more than it costs, and will it do so before the advance is delivered? If both answers are yes, the specific use matters less than getting the size right. The guides below show how to do that for each.
Uses of funding, one by one
Paying your crew while you wait on slow-paying customers or a new contract.
Read more → StockInventoryBuying the right quantity at the right time, sized to how fast it sells.
Read more → AssetsEquipmentUrgent repairs, used gear and quick-payback machines, and when to finance instead.
Read more → GrowthExpansionA second location or new service line, planned around the ramp-up.
Read more → GrowthMarketingCampaigns with a measurable return, tested before they're scaled.
Read more → TimingSeasonal cash flowFunding the ramp-up so payments fall in your strongest months.
Read more →What a merchant cash advance is not good for
Being clear about this is part of funding responsibly. We'd rather tell you an advance is the wrong tool than fund something that makes your situation harder.
- Covering ongoing losses. If the business spends more than it brings in every month, an advance adds a cost and a daily payment to a problem it can't fix. Fix the underlying economics first.
- Long-life assets. Real estate, major build-outs and machinery you'll use for a decade are better financed over years, with a mortgage, an SBA loan or equipment financing, than paid for in months.
- Personal expenses. An advance is a purchase of your business's receivables and is meant for business purposes. Paying personal bills with it puts business cash flow behind costs that earn nothing back.
For a side-by-side look at the other options, see compare your funding options. More on our approach is on the responsible funding page, and who qualifies is on the requirements page.