Stabilize Your Startup’s Cash Flow

New companies often struggle to meet challenges with cash flow. There are alternatives for meeting those challenges that can mitigate the often difficult time of early stage growth.

In the years since EMB was founded (to serve both traditional and high-risk businesses), we’ve seen many young companies struggle to stabilize their cash flow. Sales and revenue spike in some months, and dry up in others. Slow periods mean businesses can struggle to cover payroll and monthly operating expenses. What these businesses need is a source of financing that can even out cash flow. The problem is, traditional lending institutions often consider start-ups too risky.

In the early stages of any business cash flow can be highly variable. Funding growth, even paying the bills, can be difficult.

Funding for start-ups can be difficult to obtain.

We see a lot of businesses struggling because of cash flow issues, as they have already used up the resources available to them. They’ve generally used every source of capital they could find; everything from credit cards to home equity loans, to investments from friends and family.

When that capital is gone, they often run into problems obtaining funds from traditional lending sources. Banks and other lending institutions are heavily regulated and risk averse. They won’t lend to companies with very little history; they want extensive documentation and credit assessments. Not only do many start-ups not qualify, the ones that might qualify don’t have time to wait weeks or months for a decision to be made.

The situation can seem bleak. Luckily there are a number of non-traditional business funding solutions available to help start-ups stabilize their cash flow.

Peer-to-peer lending

Peer-to-peer lending services directly match lenders with businesses in need of funding. Typically the service attracts a variety of lenders who offer loans and set rates. The borrower is essentially running an auction to find the vendor with the best fit and the lowest rates.

Peer-to-peer services operate online and so they have lower costs than traditional financial institutions. Usually this means they can offer funds at lower costs to borrowers—even after fees. They specialize in quick turnaround on loan applications. Sometimes delivering decisions in as little an hour, with funds following within days.
Online lending services may be able to match businesses who don’t meet stringent traditional loan requirements with a lender willing to take on the risk.

When it comes to stabilizing start-up cash flow online, lending services are good options for firms who don’t have the credit history required by traditional lenders. The loan may be cheaper than traditional lenders can offer. However, keep in mind that online services charge a fee for their service. And, the loan will be repaid on a set schedule. Which means you have a fixed cost to deal with each month, even if cash flow slows.

Merchant Cash Advance

In a merchant cash advance a company essentially buys your future credit card sales and extends you funding the same day. It’s not a loan, so it’s not subject to the same regulatory standards for approval as a traditional bank loan. If you already have a credit card processing account, approval can be granted quickly on the basis of your existing history.


Merchant cash advances work well for companies with variable monthly sales because repayment is based on a percentage of receipts. During a slow month, less is repaid. If your short-term need is high, and repayment flexibility is important, merchant cash advances can be a great option. They help stabilize cash flow because they provide the funds you need when you need them, but the repayment doesn’t exaggerate the peaks and valleys of your cash flow cycle.

Our partner, First American Merchant, is a good example of a merchant cash advance provider.

Small business lines of credit

Several services offer start-ups access to lines of credit. A loan requires you to take a set amount of money and pay interest on the whole amount, whether you use it or not. A line of credit is more flexible. You are approved for credit up to a limit and you use as much or little of it as you need at any time. Which is great for stabilizing cash flow. If you need $2,000 to meet payroll in a particular month it’s there; if you don’t need it you don’t have to use it.


Invoice advances

Like merchant cash advances, invoice advances are not loans.  A start-up can sell a portion of their invoiced sales in return for immediate funds at a discount. Usually decisions on applications are made quickly, and funds can be accessed within a couple of days. You repay the funds when you receive payment of your invoice. A fee is charged that is set before the funds are advanced.

Invoice advances are good for business who have trouble with delayed receivables. Advances can bridge the gap between invoicing and payment—a good way to stabilize cash flow in lean months.

In the early stages of any business cash flow can be highly variable. Funding growth, even paying the bills, can be difficult, and traditional lending institutions may not approve credit if you lack a credit history. There are alternative options for obtaining funding to assist in evening out the ups and downs. Depending on your company’s needs, one of methods we’ve looked at could be a great tool for stabilizing your cash flow.

Want to learn more? Watch a quick video from our partner, FAM.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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