Seasonal cash swings – line of credit, MCA or factoring?

When July is booming and January is dead, cash management becomes an art form. Lines of credit are the workhorse: you pay interest only on what you draw and can repay when busy. Banks offer the lowest rates but require financial statements and sometimes collateral; online lenders fund quickly but at higher APRs. SBA CAPLines are designed for seasonal swings and can finance accounts receivable and inventory.

Merchant cash advances (MCAs) promise fast money, but they take a fixed percentage of your daily credit-card sales, translating into effective rates exceeding 70%—great for the lender, brutal for you. Invoice factoring is another tool: you get cash up front and the factor chases the customer. Factoring fees vary but usually land between 1% and 5%.

During the off-season, consider pre-selling service plans or tune-ups to generate cash. If you must borrow, match the tool to the job: use a line for recurring swings and factoring for a one-time gap.