FAQs
Here you will find answers to the most frequently asked questions (FAQs)
Frequently Asked Questions
Merchant Cash Advance is a type of financing that provides businesses with a lump sum of cash in exchange for a percentage of future credit and debit card sales. It is not a loan but rather an advance on future revenue.
Merchant Cash Advance works by advancing a business a sum of money based on its future credit card sales. The advance is repaid through a percentage of the business's daily credit and debit card transactions until the advance, plus any fees, is repaid.
Businesses that process credit and debit card payments, such as retail stores, restaurants, and e-commerce businesses, can qualify for a Merchant Cash Advance. Qualification typically depends on the volume of card transactions and the overall financial health of the business.
The amount you can borrow with a Merchant Cash Advance typically ranges from £2,500 to £300,000, depending on your monthly card sales and business performance.
Flexible repayments based on your sales
- Fast approval and funding process
- No need for collateral
- Can be easier to qualify for than traditional loans
Not suitable for businesses without regular card transactions
Funds from a Merchant Cash Advance can typically be deposited into your account within a few days of approval, often within 24 to 48 hours.
The repayment amount is determined by a factor rate, which is a multiplier applied to the advance amount. Instead of interest rates, MCAs use factor rates to calculate the total repayment amount.
Repayments are based on a percentage of your daily sales, so if your sales decrease, your repayment amount will also decrease. This flexibility helps manage cash flow during slower periods.
Yes, businesses with bad credit can still qualify for a Merchant Cash Advance because approval is based more on the volume of card transactions rather than credit scores.
Yes, there are fees associated with a Merchant Cash Advance. These are typically included in the factor rate, which determines the total amount to be repaid.
To apply for a Merchant Cash Advance, you will need to provide details about your business, including recent card transaction statements and bank statements. The application process is usually straightforward and can often be completed online.
Yes, many providers allow you to renew or take out a new Merchant Cash Advance after you have successfully repaid the first one, often with even better terms if your business has performed well.
Businesses that benefit the most from a Merchant Cash Advance are those with consistent credit and debit card sales, such as restaurants, retail stores, and service-based businesses.
No, a Merchant Cash Advance is not considered a loan. It is an advance on future sales, meaning the provider purchases a portion of your future card revenue.
To apply for a Merchant Cash Advance, you will typically need to provide:
- Recent credit and debit card processing statements (usually the last 3 to 6 months)
- Recent bank statements
- Proof of business ownership (e.g., business license or incorporation documents)
- Identification documents for the business owner(s)
The primary differences between a Merchant Cash Advance and a business loan are:
- Repayment Structure: MCAs are repaid through a percentage of daily card sales, whereas business loans have fixed monthly repayments.
- Qualification Criteria: MCAs focus on card sales volume rather than credit scores, while business loans often require good credit and financial statements.
- Cost: MCAs typically have higher costs compared to business loans due to the factor rates used instead of interest rates.
- Collateral: MCAs do not usually require collateral, while business loans may require assets as security.