If you have a credit card terminal, a merchant cash advance could be perfect for you
Merchant Cash Advance offers flexible repayments
If your business takes customer payments via a credit card terminal, this may be the flexible funding solution that you need. A merchant cash advance (MCA) is a popular method of acquiring unsecured lending for UK retail, hospitality and leisure businesses.
Ideal if you are asset light but have a good daily volume of card transactions, your loan is repaid as a small percentage of your sales via your merchant account. Pay more when your sales are high and less when things are slow. This flexibility works really well for businesses with variable or seasonal income.
Also known as a business cash advance, the lender provides a cash lump sum which is to be repaid on a daily, weekly or monthly basis. This is a great alternative for companies with a limited credit history or if you’ve been rejected for other types of funding.
Used by many types of industry this is suitable if you have a high volume of credit card sales, as the size of the loan will depend on this. Available for sole traders, partnerships and limited companies, you do not need to personally offer security.
- Does not require other assets or collateral to back the loan
- Only make repayments when you make sales
- No early repayment charges
- Fixed charges
- Less credit history required
- Sole traders, partnerships and limited companies qualify
You can use an MCA for a wide range of business purposes including but not limited to:
- Paying VAT or tax bills
- Marketing or new business programmes
- Purchasing office equipment or plant
- Fit-out or refit of premises
- Purchase of stock
- Working capital
The charges are decided on day one regardless of the length of time it takes you to repay. The charges will depend on your business, it’s turnover and the size of the loan. Borrowing £1 will cost between 7p and 35p
An MCA can be quite quick to set up and some lenders can make an offer within a couple of days. Most lenders do need to conduct a full risk assessment and to ensure the repayments will be affordable for you.
Even if an operator has poor personal credit history an MCA might still be available as advances are approved based on business performance and card turnover. As repayments are taken directly from your merchant credit card account the lender has a high level of security.
Usually you can as most lenders will be happy to work with your existing provider. However some providers can restrict which lenders you can use, in which case you may need to swap to a new provider in order to obtain the loan.
Anywhere between £10,000 and £300,000
The cost can be higher than a standard business loan and the fee (factor rate) is set at the start, so if you pay the loan back more quickly than anticipated you won’t get a rebate on the charges. Most lenders will also only advance 1-2 times your monthly card turnover, so if you need more than this then an MCA may not be for you.
Card machine loans is just another name for a merchant cash advance.