Merchant Cash Advance

Get an advance of cash based on future credit card and debit card sales

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Merchant Cash Advance Business Funding

Business owners looking for a fast injection of cash should consider a merchant cash advance as an alternative form of funding. It is particularly suitable if you don’t have any assets or would rather not risk an asset finance style loan. It can be set up and approved very quickly and is ideal for dealing with those sudden financial requirements all businesses experience. So, whether you need to replace a piece of equipment that has suddenly broken or you are expanding and looking for a new way to get finance, read on for more information.

As with all types of business funding, there are various pros and cons to merchant cash advance you’ll need to consider:

Advantages of Merchant Cash Advance:

  • This loan type is much faster as you don’t need a credit check to start
  • Repayment is made easy with an automatic system
  • There is usually no ongoing interest

Disadvantages of Merchant Cash Advance:

  • The amount you can borrow is limited to your transactional history
  • You will need to pay an upfront fee (instead of paying interest)
  • If you don’t process all your transactions through the card machine, the amount you can borrow will be reduced

What Is A Merchant Cash Advance?

A merchant cash advance is a relatively new form of alternative funding for small to medium businesses. It is proving to be popular as it makes borrowing easier without the risks associated with assets and the process is very fast. This isn’t a loan, but an advance on future incomes determined by transactions through your payment terminal. The merchant cash advance provider gives you a lump sum, which is then repaid automatically using a percentage of your daily credit card receipts. The amount you can borrow is determined by your average credit card sales – your receipts and transactions over the previous three to six months will be reviewed to calculate how large of an advance can be eligible for.

How Does It Work?

The idea is simple: your lender has access to your card terminal showing them your business transactions without the need for a credit check. Based on the amount of money you receive in an average month, they are able to offer you a loan.

The transparency of the process gives the lender greater security as they can see what sort of risk you might be. This benefits you because you will likely get a better deal from the arrangement. Plus, you won’t have to apply for a credit check which can add valuable time to the whole process.

Once you have agreed your loan, you will usually pay an upfront fee. This is beneficial as you won’t have to worry about ongoing interest rates which can be off-putting for some businesses. Your loan will then be repaid in a similar way to PAYE tax schemes. Instead of you making repayments, you will automatically pay each month in scale with the amount your business received. Once again, this is the magic of linking with your card machine.

If you earn more in one month, you will pay more towards your loan, but equally, if you have a slow month, you will pay less. This payment structure means that you don’t need to worry about making regular payments or about finding the cash in months where you don’t do as well. Even better, this system completely eliminates late payment fees because late payments simply aren’t possible.

What’s The Process Of Acquiring A Merchant Cash Advance?

Before you apply for a merchant cash advance, you should work out how much you can borrow as well as how much you need and check that the numbers match. If you need to borrow more than your monthly income, you should speak to us at BFS for advice on a different type of finance.

Next, you should think about how quickly you will be able to repay the loan. The faster you repay, the larger the payments will be, so be smart about your decision making here. Only repay what you can afford to lose on your card transactions. Speak to one of our advisors for advice on this and if this is the best form of business funding for you, we can get you started straight away with your application.

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Merchant Cash Advance – FAQs

This is limited to what your business receives on an average month. So, if you usually earn around £1000, this is likely to be your borrowing limit.

No. In fact, this loan type is ideal if you don’t have any valuable assets as it is simply based on your average monthly returns.

You can use the advance for anything you see fit but do check the market to see if there are more suitable funding options if you have a specific idea in mind.

No. As your lender will be able to see all your transactions, no credit check is required as there is already full transparency.

As long as you have at least 3 to 6 months of transactional history, through a card terminal, you can apply straight away.

Lead the way with a Merchant Cash Advance

At Business Funding Shop, we can advise you independently on all types of business funding and help you to decide if a merchant cash advance is right for your business. So if you have good transactional history through a payment terminal and you need to borrow money fast – merchant cash advance can help.

For more information on applying for a merchant cash advance and other types of funding available for your business, give one of our friendly team a call today on 0800 047 2389 or fill out a contact form and we’ll get back to you.