What is a Merchant Cash Advance?
A merchant cash advance allows businesses who accept card payments to borrow money based on their future debit and credit card takings. How much you will be able to borrow is based on your current card sale volumes. Some of our lenders will allow borrowing up to 150% of your average monthly card sales.
An MCA is typically unsecured meaning that no assets are required for security. They offer complete flexibility and lenders are typically able to advance up to £300,000, card sales permitting. There are also no hidden costs and funding can be released as quickly as within 48 hours.
How does a Merchant Cash Advance work?
In the case of an MCA, the lender purchases the future card sales of your business and advances you the finance you require based on your current average monthly takings. Repayments are automatically deducted as a small, agreed percentage of your daily card sales (typically between 10% and 20%).
The loan is then repaid over a period until the balance is paid off. You can choose with some lenders to pay back a higher % of your sales, if, for example, you wanted to pay back more quickly. If you choose a lower % repayment, the loan will take longer to repay, and usually carries a higher interest charge as a result.
Our lenders have agreements with all the major card acquirers meaning set up is simple and you will notice almost no difference in your existing process and will not be required to change your terminal or provider. You will continue to receive your takings paid into your bank account each day minus the agreed percentage, which will automatically be sent to the lender to go towards repaying your loan balance.
What types of businesses are suited to a Merchant Cash Advance?
A merchant cash advance is ideal solution for businesses that are seasonal or have fluctuating turnover. They are a popular option for businesses within the hospitality sector such as pubs and bars, restaurants and hotels, along with most retail businesses including online retailers. Some of the industries we serve MCA finance to include:
- Pubs and bars
- Retail businesses
- Online retail businesses
- Hair and Beauty salons
- Hotel and B&Bs
- Garages and MOT service stations
- Restaurants and food outlets
- Vets and dental practices
To discuss if an MCA is suited to your business, please contact our team today.
