In the business world, not every business owner has the perfect paper trail. Whether due to fluctuating revenue, new operations or simply not meeting bank criteria, many UK business owners find themselves lacking bank statements. For these individuals, a merchant cash advance with no bank statements can be a lifeline. But first, what is a merchant cash advance?
What is a merchant cash advance?
An MCA provides businesses with quick capital by advancing funds repaid through a portion of future card sales. Unlike fixed loans, MCA repayments flexibly align with daily or weekly card sales. This makes it ideal for businesses with fluctuating revenue.
Do you need a Merchant Cash Advance?
Why business owners seek MCAs without bank statements
Traditional lenders often shy away from businesses with limited credit history or inconsistent revenue. However, MCA providers focus on future sales potential rather than long credit histories. This makes MCAs accessible to businesses that may not qualify for traditional financing. They just need to show proof of their revenue through documents that portray their sales.
But it has to be kept in mind that not all MCA lenders will provide you with the option of an MCA without bank statements.
How does merchant cash advance work without bank statements?
For business owners like you, securing funding without traditional documentation feels like a breath of fresh air, but it’s not entirely without requirements. Instead of bank statements, merchant cash advance lenders focus on what matters the most – the sales potential.
Alternative documentation requirements
MCAs can use other metrics to evaluate your business’s capacity to repay the advance. It includes:
- Credit card processing statements: These show your business’s daily or monthly card sales volume.
- POS transaction records: If you use point of sale system, transaction data from your POS provider can give lenders insight into sales frequency and volume.
- Business tax ID and registration: Proof of an established business identity is crucial, even when bank statements aren’t provided.
How repayment works
One of the biggest benefits of an MCA is its flexibility. Repayment is typically structured as a percentage of daily credit card or POS sales, which means it ebbs and flows with your business activity. If you have a busy day, a higher amount is repaid. On a slow day, the repayment amounts adjust accordingly.
For instance, let’s say your MCA agreement sets a repayment rate of 10% of daily sales. On a £1,000 sales day, £100 goes toward repayment, while on a slower £500 day, only £50 is deducted.
According to The British MCA Association, the repayment rates range from 10% to 18% normally.
Quick and easy approval process
Without the need for exhaustive bank statements, the application approval process is streamlined. You will notice that the MCA lenders that provide funding without bank statements provide them near-to-instantly, even same-day funding – a crucial advantage when you’re in need of cash.
Benefits of getting an MCA without bank statements
The appeal of getting an MCA without bank statements lies in the speed and accessibility that MCAs offer.
1. Fast access to cash
When opportunities or urgent expenses arise, waiting weeks for a bank loan simply isn’t an option. MCAs without bank statements mean fewer hurdles and quicker funding. Imagine an MCA for a salon owner who spots a discounted lot of high-end hair products. With that MCA, she can secure the stock quickly and increase her profits in the coming months.
2. Flexible repayment terms
Unlike fixed monthly repayments, MCA repayments are tied to your daily card sales. This means that if business slows down, the repayment adjusts accordingly. For seasonal and cash flow-sensitive businesses, this flexibility can be a lifesaver.
3. Accessible to credit-challenged businesses
Securing a bank loan without an established financial history or strong credit score can be a tall order. Not only can you get an MCA with bad credit but without bank statements as well. This offers a path to capital that isn’t based on past performance but on current sales.
4. Streamlined application process
No need for endless paperwork and documentation submissions – MCAs focus on the essentials. Without the requirement for bank statements, the application process is typically shorter and more straightforward.
Alternatives to MCAs without bank statements
If a merchant cash advance without bank statements doesn’t feel like the right fit, you’ll be pleased to know there are other funding options on the table.
1. Inventory financing
If you’re in a product-heavy industry and need funds to stock up inventory, inventory financing can be a viable option. This type of financing allows you to borrow against your existing stock, using the inventory as collateral.
2. Trade credit
For businesses that work with suppliers regularly, trader credit is a simple and effective way to manage cash flow without bank statements. Trade credit allows you to purchase supplies or goods and pay for them later, usually within 1-3 months.
3. Business credit cards
Business credit cards are a more flexible financing option that doesn’t typically require bank statements. While they don’t offer large funding amounts, they come with a revolving credit line which gives you access to funds as needed.
Wth rewards, cashback options and the ability to build business credit, this option is particularly attractive to newer businesses or those with limited funding needs.
4. Invoice financing
For businesses with outstanding invoices, invoice financing offers a way to get cash tied up in unpaid bills. The lender advances a percentage of your unpaid invoices and you receive the remaining balance once the client pays.
During the first 2 quarters of 2021, the value of invoice finance ranged between £1-1.5 billion, according to Money.co.uk.
Get Linked With MCA Lenders That Don’t Require Bank Statements With ComparedBusiness
ComparedBusiness can help you secure merchant cash advance funding from lenders in the UK that don’t necessitate the provision of bank statements for approval. Just submit your requirements in less than 2 minutes and we will match you with the top financial institutions in the UK. You can pick and choose the best option as per your business requirements.
