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What Is a Merchant Cash Advance?

Merchant Cash Advance (MCA) is an easy and quick way to finance your business without taking a traditional bank loan. MCA allows you to access funds against your future card sales. It is designed for businesses that accept card payments.

The amount of MCA depends on the volume of your monthly card transactions. Repayments are collected as a fixed percentage of each future sale until the advance is fully settled.

Do you need a Merchant Cash Advance?

Cost of MCA

There is no upfront payment or hidden cost associated with MCA. You just have to pay from your future card sales. A percentage of your future card transactions goes to the lender until the advance is repaid, hence, there is no fixed timeframe as well.

Factor rate

Factor Rate determines the total cost of the merchant cash advance. It is set by both parties at the time the MCA offer is made. A factor rate of 1.2 means you must return £1.2 for every £1 you took as MCA.

For example, £1000 borrowed at the factor rate of 1.2 means you pay back £1200 from your future card sales.

Credit Check for Merchant Cash Advance

Lenders or companies perform a soft credit check before providing merchant cash advance funding. This credit check analyses how your business deals with debts or financial situations. A credit check will show various financial details, such as existing loans, your spending, mortgages, debts, or traditional bank loans associated with your bank account.

In common terms, this credit check shows whether your credit history is good or bad.

What makes a credit history bad or good?

A credit history is considered good or bad based on the following factors:

  • Payment history
  • How much of your available credit you are using
  • Length of credit history
  • New credit applications
  • Financial performance of your business
Good Credit History Bad Credit History
Always pay on time
Late or missed payments
Uses a small portion (30%) of available credit
Uses a high percentage of available credit or exceeds credit limit
Long history of managing finances responsibly
Short or no history of credit usage
Applies for new loans occasionally
Frequently applies for new credit
Increasing revenue
Decreasing profits

Do you need a good credit history for MCA funding?

The direct answer is No, not in all cases. Lending companies are not like traditional banks, which require a good credit history. You can get MCA funding even with bad credit, as long as you bring in a minimum amount of monthly credit card sales.

Even if you don’t qualify for MCA funding from a lender or two, don’t worry. It’s not the end of it. The lending industry in the UK is very competitive and you can always look into other providers that have lenient terms for credit checks.

How to Get an MCA Without a Credit Check?

Unlike traditional banks, merchant cash advance lenders do not conduct strict credit checks. This is because they focus more on the daily credit card receipts of a business than its credit score. However, it’s important to understand that in the UK, it is rare for lenders to offer MCA funding without a credit check.

Why credit checks are important

In merchant cash advances, lenders provide money based on future card sales and do not require any collateral beforehand. These lending companies take on significant risk, and they need to ensure that the client they are working with is worth this risk.

By reviewing a business’s credit history, lenders can see how well a business has managed its finances in the past. Reliable lenders use this information to ensure that they are not taking on excessive risk by lending to borrowers who might not be able to repay.

Look out for red flags

If a lending company does not perform any credit checks at all, it could be a red flag. It is an irresponsible lending practice and this means that the company does not care for its financial responsibility.

Often, companies that do not require credit checks make up for the increased risk by charging 10%- 20% higher fees as compared to usual, which is not worth the money in the long run.

Who Qualifies for MCA?

So, to be qualified for Merchant Cash Advance, here are three basic requirements:

  • Your business receives payments through card terminal machines.
  • A good volume of card transactions (typically more than £5,000).
  • Profitability to show that you can repay the loan (you have been in business for more than 6 months or a year).

Is MCA a Financial Option for My Business?

You can use these points as a checklist if you are considering an MCA:

  • Your business regularly processes credit card transactions each month.
  • You need money to cover immediate expenses for your business.
  • You are looking for short-term financing rather than a long-term debt commitment.
  • Your business has faced difficulties securing traditional bank loans due to a bad credit history.
  • You are aware that the costs associated with MCA are higher as compared to traditional loans.

Pros and Cons of MCA

Pros Cons
  • Access funds quickly
  • No security assets required
  • Transparent fees
  • Increase cash flow
  • Does not affect credit history
  • Do not need good credit history to qualify for it


  • Higher fees than other traditional financial options
  • Regular repayments can affect cash flow
  • Businesses need to have significant credit card sales to qualify


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Merchant Cash Advance (MCA) is an easy way to finance your business without taking a traditional bank loan. MCA allows you to access funds against your future card sales. It is designed for businesses that accept card payments.

The factor rate decides how much a business will ultimately pay back for an MCA. It is the fee you pay for the lending services. For example, a factor rate of 1.2 means that the business will pay back £1.20 for every £1 borrowed.

MCA lenders look closely at how much money a business makes each day from credit card sales. This helps them see if the business earns enough regularly to pay back the money. They don’t focus much on credit history because it only shows past money management, not what the business earns now.

Businesses can access funds from an MCA within a few days after approval. The exact time can vary depending on the lender.

Yes. You can negotiate the factor rate, the amount of repayments, and the term length of the agreement. It’s important to discuss these terms with your lender before getting into an agreement.

Written by:

Henry Baker
Henry Baker
Henry Baker, an adept financial & business copywriter in England, boasts a decade-long career collaborating with top-tier UK financial institutions. Renowned for his skill in translating intricate finance into captivating content, he's a trusted authority in simplifying complex concepts for diverse audiences.