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A Merchant Cash Advance for Women-Owned Businesses

Sep 10, 2008
Women-owned businesses are a growing trend in Canada. According to statistics compiled by the University of Ottawa, approximately 47 percent of all SMEs (small and medium-sized enterprises) in Canada, include some degree of female ownership, while "majority women-owned" businesses account for approximately 17 percent of Canadian SMEs. It is evident that in the most recent years, more and more women have begun to go into business ownership, and the majority of women-owned businesses are new businesses, with 39 percent of majority women-owned small or medium-sized enterprises having entered the market within the past five years, states the report.

Still, in comparison to businesses owned by men, women-owned businesses generate less revenue, have less equity and produce less profitability. Women-owned businesses also pale in comparison to men-owned businesses when it comes to size, as the majority of women-owned firms (85 percent) are micro-businesses employing fewer than 5 people (Carrington, 2006).

The report states that one of the reasons for these numbers is the lack of capital in women-owned businesses. If this is true, a merchant cash advance has the potential to propel a woman-owned business to the next level. A merchant cash advance could serve as the working capital needed to increase revenue, expand a business, or execute other business plans.

The fact that most of Canada's women-owned businesses are in service-based industries, makes merchant cash advances ideal for most Canadian businesses owned by women. As the name hints, a merchant cash advance is an acceptable means of business financing for merchant businesses, i.e. businesses that sale retail and/or services. According to the University of Ottawa report, in 2001, four in five small and medium-sized businesses with over 50 percent of women ownership were service-based, compared to only 59 percent of SMEs owned by men.

How Does a Merchant Cash Advance Work?
Merchant cash advance lenders purchase a business' future credit card sales. A business owner is then free to use the money for anything her business may need. Then, when customers make purchases with credit cards, a small percentage from each sale is deducted, and put towards the repayment of the advance.

There are many advantages to the set-up of a merchant cash advance: The payments are deducted automatically, eliminating the obligation of making monthly payments that many other types of small business loans impose. Acquiring a merchant cash advance is also generally very simple, due to the minimal requirements, and the speed in which money can be funded into a business owner's bank account.

There are a variety of funding options available for women in Canada. Women are able to utilize the various options of small business financing that are available to all small business owners such as the Canada Small Business Financing Program. They can also use small business financing grants and loans and resources that are especially for women, like the ACOA Women in Business Initiative, which focuses on improving access to business financing for women. A merchant cash advance can be an excellent source of business-financing and can be used in conjunction with, or in place of these sources of financing for women-owned businesses.
About the Author
David Castro often writes articles about Merchant Cash Advance for Merchant Resources International - To Learn more Visit Us at http://www.mymerchantcashadvance.ca/
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