A prime source of funding for consumer facing businesses
Merchant Cash Advance
A merchant cash advance (MCA) is flexible business funding that unlocks future income to provide immediate cash today. These loans may also be called a business cash advance. With an MCA, the lender provides a lump sum that’s repaid from customer card receipts. Repayments are made on a daily, weekly, or monthly basis and as a fixed percentage of card payment receipts.
Merchant cash advances can be easier to obtain than traditional funding options and they’re a good alternative for businesses with few assets, or limited credit history. Businesses that have been rejected for other types of funding may still qualify for a merchant cash advance.
The product is designed for companies and organisations that take card payments from customers. Ideally most suitable for businesses with a high volume of card payments, merchant cash advances and are used by many types of industry. Sole traders, partnerships and limited companies are welcome to apply.
Funding
1-2x monthly turnover
Repayment Terms
% of each card transaction
Typical rates?
fixed charge per £ borrowed
All interest rates quoted are indicative only as rates will only be confirmed based on the risk profile for each deal. Risk category associated with the deal. This is based on primarily debt survivability and security available for the loan
Advantages of Merchant Cash Advance
Merchant cash advances are flexible and scalable. You can benefit as your business grows as the lender may increase the facility based on the operating pattern of your business.
Unlike many other forms of business funding, an MCA can often be agreed quickly. In some cases, a loan offer can be made within 24 hours of application.
You pay back what your business can afford based on your customer card income.
Taking out a cash advance is a good option for businesses with limited credit history or few hard assets but is an unsecured form of business finance
Every time a customer uses the card machine, a percentage is automatically transferred to the lender.
As merchant cash advances are provided based on business performance and card turnover, it is possible for operators with poor personal credit to obtain an MCA. Business owners who have been rejected for other types of funding may still qualify for a merchant cash advance.
Things to be aware of…
The cost may be higher than a standard business loan
There are no penalties for early repayment but the fee you pay to establish is at the start of the loan
You will need to share some financial records though bank statements are normally sufficient though for limited companies . Different lenders do have slightly different criteria.
If your business receives payment in a variety of different ways, a merchant cash advance facility may not be a perfect solution. It’s best-suited to businesses that do the majority of their business via a card terminal.
