Merchant Cash Advances
Finance for SME’s in the UK with no fixed payments, fixed terms or security required. The advance is repaid as a percentage of future card sales.
Small businesses may need help to increase revenue, attract and maintain customers, or invest in inventory – and a Merchant Cash Advance (MCA) could help.
Unforeseen costs, seasonal fluctuations, and unprecedented circumstances can all impact small business growth.
Merchant Cash Advances can offer companies short-term support to keep their enterprises running smoothly.
What is a Merchant Cash Advance?
A Merchant Cash Advance, or MCA, is short-term funding for businesses that accept debit and credit card payments.
An MCA is an alternative mode of financing to traditional small business loans.
With an MCA, lenders provide businesses with an upfront sum of money, which a business then repays using a percentage of its card transaction sales, plus fees.
Unlike small business loans, companies can acquire an MCA without needing to offer up assets for security, such as property or inventory, to access funding.
How does a Merchant Cash Advance work?
Traditionally, the MCA repayment procedure is structured as follows:
- A provider establishes a business’s factor rate – which is a tool in a decimal form that expresses interest rates for business financing – and then lends the company an upfront sum.
- The sum is deducted daily, weekly, or monthly via a percentage of the company’s sales, plus interest, until the amount is repaid in full.
- The amount repaid is determined by debit and credit card sales; however, a typical deduction can be around 10% of each card sale.
Repayment time scales for MCAs typically range from 3 to 18 months.
Unlike other small Business Loans, there are no conventional repayment terms as they are subject to the company’s sales; the higher the number of debit or credit card purchases, the quicker the advance can be repaid.
How can a Merchant Cash Advance help your business?
Merchant Cash Advances can benefit small businesses requiring urgent capital to cover emergencies, short-term expenses, or cashflow shortages.
Businesses can use MCAs to cover numerous expenses, such as:
- equipment purchases
- repairs and renovations
- marketing and advertising strategies
- inventory purposes
- working capital
- expansion costs
What type of business is a Merchant Cash Advance suitable for?
Merchant Cash Advances could be suitable for all small businesses that receive payments via a substantial volume of card transactions, whether online or face-to-face.
Many businesses could benefit from MCAs, for example:
Retail businesses: Shops that accept card payments can use a Merchant Cash Advance to purchase extra inventory; for example, a small clothing business may need additional Christmas stock around December; therefore, an MCA can help pay for the extra goods.
Hospitality: Restaurants, cafes, and hotels could use an MCA to purchase ingredients, kitchen appliances, tables and chairs, utensils, wall decorations, or renovations.
Trade businesses: Service businesses such as carpenters, plumbers, or electricians could use an MCA to fund emergency repairs, which may entail purchasing the necessary tools or materials to complete priority jobs.
How to apply for a Merchant Cash Advance
Contact our team and we will guide you through our fast and efficient application process where you will need to complete our application form and provide necessary documentation, this includes business bank statements, etc.
For all enquiries and to begin an application contact our office: 01204 398816
Information correct on date of publication
