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What Is Merchant Cash Advance?
It is an ideal financial solution for small businesses with low assets or limited credit history and a good volume of credit card transactions. SMEs including retail stores, restaurants, and service-oriented businesses are best suited for MCA.
With Merchant Cash Advance, you can inject anywhere from £ 2,000 to £300,000 into your business within days. MCA offers quick funding with no security assets required as collateral with flexible repayment options.
How Merchant Cash Advance Works
Get Quotes from top MCA lenders delivered to your email
Choose your pick & get quick funding
Repay when you sell through your credit card sales
Merchant Cash Advance vs A Business Loan
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Fixed Term |
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Flexible Repayments |
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Security Assets Required |
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Quick Funding |
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What Are the Costs of Merchant Cash Advance?
There is no upfront payment or hidden cost associated with MCA. You just have to pay from your future card sales. A percentage from your future card transactions goes to the lender until the advance is repaid, hence there is no fixed timeframe as well. The total cost of Merchant Cash Advance is determined by Factor Rate. The Factor Rate is set by both parties at the time the MCA offer is made. A Factor Rate of 1.2 means that you have to 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.
The factor rate is the premium charged by a merchant cash advance lender. It is determined by the MCA provider & receiver at the time of agreement. It remains fixed until the advance is repaid. It is set at fixed pennies per pound on the advance taken. For example, a factor rate of 1.2 (or 20p) means that for every £1000 borrowed, you pay back £1200 from your future card sales.
Factor Rate depends upon the business credit rating, volume of credit card sales, and profitability. A higher factor rate indicates that the MCA provider is associating higher risk with your business.
To be qualified for Merchant Cash Advance, here are three basic requirements:
- Your business receives payments through card terminal machines
- Good volume of card transactions
- Profitability to show that you can repay the loan
Access funds quickly
No Security Assets Required
Flexible to your needs
Transparent Fees
Increase Cash Flow
Reduce Bad Debt
Sectors Merchant Cash Advance Covers
Retail
Mechanics
Restaurants
Bars & Clubs
Leisure Clubs
Plus Many More
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Merchant Cash Advance FAQs
The borrowing amount for a Merchant Cash Advance depends on your business’s credit card sales volume. MCA providers typically consider your past few months of credit card sales and profitability to determine the total amount you can borrow. This amount can range from a few thousand to over a hundred thousand pounds.
No, MCAs don’t have fixed monthly payments. Repayments are made as a percentage of your daily, weekly, and monthly credit card sales (usually 10-30%). This means your repayments will vary based on your sales volume.
Yes, it’s possible to obtain an MCA with a bad credit rating. MCAs are primarily based on the sales performance and profitability of your business rather than your credit score.
MCA is an ideal solution for your business if it needs quick funding, has a good volume of credit card sales, and you are comfortable paying some extra costs to get quick cash. MCA is often used for short-term funding needs and is usually more expensive than traditional loans.
Merchant Cash Advance is an unsecured form of lending, which means you do not need assets or a great credit rating in order to have the advance. This makes Merchant Cash Advance a suitable option for Small Businesses.