- Get from £5k – £500k to grow your business
- In Partnership with Merchant Cash Express
- Business Loans and Business Cash Advances
What is a Merchant Cash Advance?
If you’re looking for funding to grow your business, you will probably start looking at business loans. But, especially for smaller firms that accept credit and debit card payments through their terminals, business cash advances are another favourite source of funds.
A business gets an upfront amount to use in any way the business needs. Instead of a repaying a fixed monthly amount, you repay us via a small percentage of each card payment you receive. This way, you don’t have to repay when business is slow.
The beauty of this product is that you only repay when you trade. When business is slow, you pay less. There is no rush as the total repayable is fixed. Whether you repay in 3 or 14 months, the total repayable agreed on will remain the same.
How does a Business Cash Advance work?
Business cash advances originated in America, where the product has become very popular. Merchant Money was one of the first providers to bring the business cash advance concept to the UK in 2013. It’s a simple concept that works well in the hospitality, retail, health & beauty and many other sectors.
Step 1 – Qualify for up to 100% of your average monthly card transactions. For example, a business that – on average – receives £6,000 per month through its PDQ machine, could qualify for an advance of £6,000.
Step 2 – We agree on the total repayment – this is based on a factor rate starting from 1.15. For example, for a £6,000 MCA with 1.2 factor, the total repayable would be £7,200.
Step 3 – You repay via a fixed percentage that is automatically collected off your future debit/credit sales, with no fixed term or fixed monthly payments. For example, if a customer pays you £100, £85 would go to you and £15 would automatically go back to Merchant Money.
How much does it cost?
With a Merchant Cash Advance, we pre-agree on the total amount that needs to be repaid, without specifying a term. To calculate this amount, we use a factor rate, starting at 1.15. The factor rate we use is subject to underwriting. Because you repay via a small percentage of future card transactions, you won’t have fixed monthly repayments or a fixed repayment schedule.
- Your monthly card turnover: £15,000
- Advance amount: £15,000
- Factor Rate: 1.2
- Total repayable: £18,750
- Collection rate: 12%
Benefits of a cash advance
Advantages of a cash advance for your business:
- No fixed repayment periods
- Ideal solution for companies with high seasonality and fluctuating cash flow
- Automated process with no manual payments from the customer
- You only pay as you trade; when the business is quiet, you pay less
- Top-ups available after 4 months
- Better cash flow
- We can work with all card terminal acquirers
- No collections off cash payments
What is the difference between a Business Loan and a Merchant Cash Advance?
A merchant cash advance is different than a loan in that we essentially pre-purchase some of your credit card transactions, “advancing” the money to you. We will “own” some of your future sales and will collect the money from those sales.
Unlike loans, cash advances technically don’t have an interest rate or a set repayment period. Instead, we take a percentage of all your credit card sales, until you’ve reimbursed the balance and the fee agreed on.
Business loans have stricter eligibility requirements, and in months with slower sales, you still owe the full monthly repayment. Especially for those businesses where the card transactions vary from month to month or from season to season, the cash advance can be the perfect solution. The main benefit is that you repay at your own pace. Or to be precise, at the speed your business grows. Because repayments rise and fall with your sales, you’ll never need to worry about being short at the end of the month. And because there’s no fixed term for the repayments, there’s never any pressure. Business cash advances are a safer alternative to business funding because there is no such thing as a missed payment.
When do I qualify for a Merchant Cash Advance?
We welcome all UK based limited companies, sole traders and (unincorporated) partnerships. We offer flexible finance solutions for all UK businesses. That includes retailers, restaurants, hotels, pubs, hairdressers, beauty salons, service providers and more. Companies use our product for all sorts of purposes, from bridging short-term cash flow gaps to purchase stock or refurbishments.
If you want to apply and get a quote, please make sure you are aware of the following qualifying criteria:
- Minimum of 6 months trading through PDQ machine
- Minimum turnover of £5,000 per month through card terminals
- No other Cash Advance in place (unless to be refinanced)
Reasons to choose for a Merchant Money Cash Advance
Each business is unique, and that’s why we don’t believe in ‘one size fits all’. At Merchant Money, we offer a broad range of products which we can tailor to a business’ specific needs. If the cash advance isn’t the right product for you, there is more we can offer.
- Convenience & Personal Touch
We want to help your business grow. We don’t need detailed business plans, all we ask for is a bit of your time to get to know you and your business. We can then find the best suitable solution that fits your business’ needs.
- Fast decisions
By combining our evaluations with patented high-tech risk assessment technology, we can guarantee a 24-hour approval.
What our customers are saying
‘’Extremely efficient service. Our point of contact was polite, professional and quickly understood our requirements. Entire process from application to funds transferred to our account, was completed in 3 working days. Thanks to the team at Merchant Money.’’
Costa Georgio, Georgios UK Wholesale
“Our recent experience with Merchant Money was faultless from start to finish, and I have no hesitations in recommending them for their professionalism and efficiency when handling our recent financing needs for the business. Their plain speaking and simple approach to our needs gave us the confidence that we were working with a finance house that genuinely wanted to go that extra mile in helping us find the best solution in the most cost-effective way possible. We would never approach any other finance provider without giving Merchant Money the opportunity first”.
Dominic Boyett, Director UE Coffee Roasters
“Fortunately, Merchant Money understands my business and have assisted me in improving my facilities several times. The process is fast and straightforward, and the MM team is excellent to deal with. I will definitely partner with it again.’’
Martin Horner, Director The Borough
Other Business Loans we offer
Frequently Asked Questions
We can provide you with an advance up to 100% of your average monthly card turnover, to use in any way your business needs.
You receive an advance and the total repayable is calculated by what we call a factor rate. This is typically between 1.2 and 1.3. If £10,000 is advanced to you, the total repayable would be £12,000. Please note that we assess each applicant individually based on their risk profile and personal circumstances. Each application we receive is different and subject to the businesses’ status and circumstances. We try to make responsible credit decisions based on a wider range of criteria and credit data.
Please note that a merchant cash advance is not a loan. There are no large monthly repayments, no variable interest rates and no fixed term.
We would need to review 3 months’ bank statements, your last 6 months’ merchant statements and in some cases we ask for filed accounts.
We will agree upfront a daily percentage of your card sales transactions – and this will be automatically deducted by the processor. So the payment will fluctuate directly in proportion with your daily card sales.
Speak to one of our online consultants
or call us on 0800 848 8480