How Small Businesses Can Combat Staffing Shortages with Merchant Cash Advance Funding

Staffing shortages continue to challenge small businesses in many industries in 2022, primarily in accommodation, food services, and manufacturing.

A June survey released by Statistics Canada found that “64% of accommodation and food service respondents said they would encounter labour shortages in the next three months,” followed closely by construction and manufacturing at 44.6% and 43.6% respectively.

In Q1 of 2022, 45% of businesses said they planned on increasing wages in the coming year. Raising compensation is one way to attract and retain talent, but there are many other strategies small businesses can employ to boost hiring and mitigate the impact of staff shortages, such as automating routine processes. Many of these strategies require an investment of working capital that small businesses may not have on hand after two years of shutdowns and restrictions and major changes in consumer behavior.

Merchant cash advances (MCAs) may be an ideal solution for small businesses that want to boost cash flow in order to hire, innovate, and grow.

What is a Merchant Cash Advance?


Merchant cash advances provide business owners with a lump sum of capital in exchange for a percentage of future sales. There are no restrictions on how MCA funds can be used, but they are typically best used to finance strategies that will have a faster return on investment, such as hiring new staff or investing in automation or new technology.

Available from alternative lenders like Greenbox Capital®, merchant cash advances have more flexible approval criteria than traditional forms of funding like Canada Small Business Financing Program loans or bank loans. With a streamlined online application, these lenders can even approve and deposit funding in as little as one business day. This makes merchant cash advance ideal for businesses that need quick funding, have lower credit scores, or have little to no collateral.

How Merchant Cash Advances Can Help You With Staffing Shortages


Let’s look at some of the ways you can use a merchant cash advance to deal with staffing shortages in your small business, including:

  1. Hiring new staff
  2. Offering higher wages and better benefits
  3. Upskilling existing staff
  4. Offering employee referral bonuses
  5. Providing flexible work hours
  6. Investing in automation technology to reduce staffing needs
  7. Working with a staffing agency

1. Hiring new staff


Dealing with staff shortages means recruiting proactively instead of waiting till your existing team is stretched thin and burned out. Some common ways of doing this are by offering paid internships, participating in job fairs, or working with college training programs to generate a hiring funnel.

Merchant cash advance funding can give you the capital you need to proactively hire new staff and avoid shortages, as well as cover the cost of onboarding while your new team gets up to speed.

We can help connect you with the top merchant cash advance lenders in Canada. Get a business loan to hire new staff now!

2. Offering higher wages and better benefits


Paying above-average wages shows that you value your employees. Not only does it have a positive impact on your current employees’ job satisfaction, it can also help you attract more loyal, hard-working candidates.

Offering employees better perks, like extra paid time off, paid overtime, comprehensive health benefits and sick leave, or retirement savings plans can also minimize turnover and attract quality staff members.

A merchant cash advance can give you the working capital you need to implement these changes without impacting your cash flow.

3. Upskilling existing staff


Investing in your existing staff is one of the best ways to minimize employee turnover.

Use a merchant cash advance to finance professional development for your current team, such as covering tuition that will allow your business to offer new or expanded services or the cost of certifications and other professional training. Not only will your staff provide more value to your business, they’ll also work more efficiently and help you earn more money.

4. Offering employee referral bonuses


You can incentivize your current staff to share new job openings with their peers by offering an employee referral bonus. When a staff member refers a candidate whom you hire, and when that candidate stays for a certain period of time, the referring employee could receive a reward, often in the form of a cash bonus. Merchant cash advances can provide the working capital you need to implement this kind of employee referral program.

5. Providing flexible work hours


Offering flexible work hours shows your staff that you value work-life balance—an enticing perk for new employees (especially millennials) and a great way to retain current staff members. A merchant cash advance gives you the extra working capital you need to hire more part-time employees and accommodate flexible work schedules without straining your cash flow.

Depending on your business, you can also use MCA funding to invest in technology and remote office equipment that will allow staff to work remotely with flexible hours that accommodate their needs.

6. Investing in automation technology to reduce staffing needs


Automation helps your employees work more efficiently, and it can sometimes even take the place of certain staff roles. Automating simple, time-consuming tasks (like managing inventory, taking orders, or booking reservations) allows your existing employees to focus on higher priority tasks that generate more revenue for your business. Investing in this type of technology is a great way to use merchant cash advance funding.

7. Working with a staffing agency


A staffing agency can be an effective and efficient way for you to find talented candidates to fill open positions. Working with a staffing agency comes with its pros and cons—on one hand, you can tap into a large pool of potential talent; on the other hand, you may have to pay a hefty commission after you hire. Merchant cash advances can be used to cover agency service fees so you can concentrate on operations and growth rather than hiring and onboarding new employees.

You can also use a staffing agency to fill in any staffing gaps when permanent employees are away, if you need extra help for a special event, or if you need to hire seasonally.

Will an MCA Help You Manage Staffing Shortages?


Merchant cash advances offer small businesses a quick and simple way to leverage working capital. Because MCAs are repaid from a portion of your daily or weekly sales, hiring employees to help grow your business can allow you to repay your funding faster than other small business loans like Canada Small Business Financing Program loans.

When you choose a reputable alternative lender, merchant cash advances offer several advantages over those you’ll find at traditional lending institutions, such as simplified applications and less rigorous approval requirements, faster processing and approvals, and greater flexibility and room to negotiate.

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Pamela Kohl

With over 25 years’ experience in financial services, Pamela Kohl has worked closely with banks, alternative finance, and other fintech platforms to develop core banking services, as well as establish new card programs, lending programs, and global payments platforms. She has been nationally recognized for creating innovative solutions, leveraging new markets, and developing winning strategic partnerships. Currently, Pamela serves as Vice President of Marketing at Greenbox Capital. Pamela earned a B.A. from Marshall University, summa cum laude, and M.A. in International Economics from the University of Miami, where she graduated with Distinction.

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