Business owners in Ohio may encounter unanticipated financial problems if they start a venture without a sizeable nest egg. It is not uncommon for business owners who encounter financial difficulties to be unable to keep up with scheduled payments. This may cause severe cash flow problems. If a small business owner is unable to settle debts, he or she may fall into the trap of a merchant cash advance that can cripple the business in no time at all.
The owner of a small business in another state explained the adverse impact such an advance had on her roofing business. Out of desperation, she applied for a merchant cash advance of $95,000, and it was approved almost immediately. However, $35,000 was deducted from that amount for fees and interest -- at 41 percent -- and she received only $60,000. Repayment started immediately, and she had to pay approximately $560 per day. Needless to say, this only exacerbated her problems; before long she took another cash advance, bringing her business debt to $130,000.