Avoid the money that kills small businesses

Not all funding helps — some of it is a trap dressed up as a lifeline. Merchant cash advances and daily-payment 'quick funding' can carry effective rates north of 100%, and they've sunk more small businesses than any slow month. Learn to spot the bad money before it spots you.

Do this

1. Beware 'merchant cash advances' and anything taking a daily or weekly cut of your sales — the real cost is brutal.
2. Always find the real cost: ask for the APR, not a 'factor rate' or a flat 'fee.' If they dodge, that's your answer.
3. Never sign a personal guarantee or a 'confession of judgment' you don't fully understand — get a pro to read it.
4. When cash is tight, call your existing lender or a CDFI first; desperation borrowing is where businesses die.

Spot the trap

The pitch is always "fast, easy, no credit check." The cost is hidden.

RUN if you see: ✗ "Factor rate" or a flat fee instead of an APR (often 40-150%+ real APR) ✗ Daily or weekly automatic withdrawals from your bank / card sales ✗ Pressure to sign today, or a "confession of judgment" clause ✗ Renewals that pile a new advance on top of the old one (the debt spiral)

DO instead: ✓ Ask for the APR in writing and compare it to a bank/CDFI/SBA option ✓ Have a free SBDC/SCORE advisor or a lawyer review any term you're unsure of ✓ If you're only borrowing to survive a slow stretch, fix the cash flow first (see the Money track) — don't paper over it with expensive money.