Running a small business in today’s downed economy takes careful planning and a backup of cash to protect one’s brand from those little mishaps that are known to take place.

Having to replace a vital piece of equipment that suddenly failed can eat into your payroll funds if you don’t have a supply of cash on hand. In times like this, business owners will often apply for a merchant cash advance to protect their business and to allow operations to proceed.

With the economic slump applying its pressure, most of us have anything but perfect credit. Thankfully, alternative lenders do not subscribe to big bank regulations when providing cash advances to struggling businesses. Read on to learn why merchant cash advances are the best solutions for small business owners in times like these.

Why are credit lines hard to come by?
Due to current hard economic times, lenders are not as likely to provide credit lines to small businesses unless their credit is sterling. It is ironic that big banks are partially responsible for the economic slump that ignited in 2008, yet they offer no leniency in helping small businesses — the very entities that are greatly responsible for economic growth.

However, thanks to alternative lenders, thousands of small businesses have been able to survive and provide salaries to members of the community.

How does a cash advance loan work?
There are two primary ways in which one can get a cash advance loan towards their business. Cash can be advanced according to future credit card receipts in which a mutually agreed upon percentage is taken from future earnings until the loan amount has been paid back.

Another option to consider is the fixed payment plan. These are typically paid back on a weekly or monthly basis until the loan amount has been satisfied.

Is it better than a standard loan?
A merchant cash advance is designed to service those who only need to borrow a small amount versus tens of thousands of dollars. If you own a printing service, and your machine breaks and needs to be replaced, a merchant cash advance is the ideal loan for this type of situation.

The borrower doesn’t have to put up collateral or offer a personal guarantee. Furthermore, utilizing this type of loan will not show up on credit reports and flag you should you ever want to apply for different loan types. Finally, there are no restrictions regarding how the cash is used, and the process is extremely fast with no hassles.

Making better profits
A merchant cash advance is a great way to turn a profit in a struggling economy. In an article published by ABC News on the benefits of a merchant cash advance, the journalist reports that businesses should take advantage of these programs in order to stock up on inventory before the holidays.

The article states that they are excellent alternatives to traditional bank loans in that they are fast, secure and don’t provide any hassles.

Securing your services
If you suddenly need to halt operations it will tarnish your business reputation. When you need cash due to an unsuspecting hiccup, or if you simply want to stock up on inventory before a busy shopping season, consider the merchant cash advance loan as a great way to stay afloat and make a profit in our challenging economy.

Financial advisor Matt Krantz of USA Today recommends selling poorly performing stock to pay off pressing credit card debts.

Stock portfolios have generally stagnated over the past five years. If you are paying 15% annual interest rates on credit card debt at the same time it can seem like a no-win situation.

Matt wisely suggests that you should “strongly consider liquidating a big piece of your non-retirement portfolios to pay down your credit card debts”.

This translates as a guaranteed 15% annual return.

Moreover, “a 15% guaranteed return by repaying debt is just about the closest thing to a home run you’re going to find in this market”.

You bet.

If you were an investment banker, the chances are you’ve already lost your job. If you were something less than a Master of the Universe, yours may have disappeared without a splash on CNN.

Is there any consolation for losing a job or a career, even in an economy on the brink of a slump? Paul Graham makes a great case for it.

“Our bodies weren’t designed to eat the foods that people in rich countries eat, or to get so little exercise. There may be a similar problem with the way we work: a normal job may be as bad for us intellectually as white flour or sugar is for us physically.”

But don’t jobs and food actually go together?

“The root of the problem is that humans weren’t meant to work in such large groups. … Though they’re statistically abnormal, startup founders seem to be working in a way that’s more natural for humans.”

Paul Graham — who is a venture capitalist — is right. You can buck the system and you owe it to yourself to make the attempt.

Incidentally, a recession is a great time to go it alone. Venture capitalists have money burning a hole in their vaults, there’s a surfeit of experts going cheap, and opportunities for anyone with a great idea or a new approach.

Innovation is at a premium during a downturn. Many of the biggest names in corporate America began in a garage during a recession when there was little else to do.

With the Bank of England already deep into the process of printing money by buying back the government’s debt, The Fed has yet to attempt this operation, preferring to buy corporate bonds instead.

The potential inflationary effects are the main are of concern. Others take the line that the Bank in the UK could do little else to boost the money supply, while a few politicians have pointed out that broad money (M4) is already rising by 20+ percent.

The BBC’s Economics Editor, Stephanie Flanders, weighs in with an informative piece on how the Americans are doing it — mainly by buying corporate bonds, not Treasuries:

Ahead of the curve

A good primer on the pros and cons is given by the BBC’s Business Editor, Robert Peston on his blog:

Will QE work?

My favourite is by the Daily Mail’s City Editor, Alex Brummer, who today gives an emphatic thumbs down to the whole operation.

Bank’s great experiment may prove gamble too far

Syntagma also greeted the “new dawn” of lumpen monetarism with incredulity:

Watch out for the mashed potato machine

Food for thought.