Merchant Cash Advances
Merchant Cash Advances offer a unique form of lending based on a business’s future revenue, particularly suitable for companies that have a steady flow of card payments. This financing method is ideal for businesses requiring fast access to capital.
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Check your eligibility for merchant cash advances with our online form without affecting your credit score.
*This loan example is for illustrative purposes only. All finance and quotes are subject to status and income. Click here to check your eligibility to receive options tailored to your circumstances.
How It Works
A cash advance provides a lump sum to the business, which is then repaid through a fixed percentage of daily customer card sales. This arrangement allows repayments to align flexibly with the business's revenue, providing ease during fluctuating sales periods.
Eligibility and Application
Suitable for a broad range of businesses, particularly in retail, hospitality, and e-commerce. Requirements typically include a minimum trading history of six months and a consistent level of card transaction turnover.
Advantages and Practicality
Merchant Cash Advances offer the flexibility of repayment terms that adapt to sales volume, making them less burdensome during slower business periods. They are unsecured and can be arranged quickly, often within 24 hours.
Loan Amounts and Repayment
Loan amounts can range from £10,000 to £350,000 or more, depending on monthly card sales. Repayments are a proportion of revenue, so they vary with the business’s income, providing a manageable approach to financing.
Utilisation
Funds can be used for various business purposes, such as emergency expenses, stock purchases, working capital needs, equipment upgrades, and more.
Costs and Transparency
The total cost of a cash advance is agreed upon upfront, without the compounding interest typical of traditional loans. This clarity and transparency help businesses plan their finances more effectively.
Considerations
While offering quick access to funds and flexible repayments, businesses should consider the total cost of borrowing and ensure that the advance aligns with their cash flow capabilities and business model.
Frequently asked questions
What is a merchant cash advance?
A merchant cash advance is a type of funding where a business receives a lump sum in exchange for a portion of its future card sales. It’s typically used by businesses with a high volume of card transactions.
How does a merchant cash advance work?
The lender provides an upfront sum to the business. The business then repays this advance through a fixed percentage of its daily card sales until the total repayable amount is met.
Who is eligible for a merchant cash advance?
This is ideal for businesses in the UK that have a steady stream of card sales, such as retailers, restaurants, and online merchants. Generally, a minimum trading history and a certain level of card sales are required.
What is the typical advance amount for a merchant cash advance?
Advance amounts can range from £10,000 to £350,000, depending on the business’s card sales volume and lender’s assessment.
How are repayments structured?
Repayments are made as a percentage of daily card sales. This means the repayment amount varies with your business’s income, providing flexibility.
What are the advantages of a merchant cash advance?
It offers quick access to capital, flexible repayments that align with your business’s revenue, and doesn’t require collateral.
Are there any fees involved?
The total cost of the advance is agreed upon upfront. There are no interest rates in the traditional sense, but the lender will charge a fee, which is included in the repayable amount.
Can I repay the advance early?
Yes, you can typically repay early. However, the cost may not reduce significantly as the total repayable amount is agreed upon in advance.
What’s required to apply for a merchant cash advance?
You’ll need to provide proof of your card sales volume, business trading history, and sometimes bank statements or financial accounts.
Is a personal guarantee required?
This depends on the lender, but personal guarantees are not usually a requirement for merchant cash advances, as the advance is unsecured.
Get a merchant cash advance
Limited companies can receive a loan decision without impacting their credit score. This allows you to evaluate your options without worry.
