Merchant Finance Loan Requirements: What UK Businesses Need to Know

Cash flow is the lifeblood of any business. Whether you’re buying materials, upgrading equipment, or covering seasonal dips, access to fast funding can make the difference between growth and stagnation. Merchant finance is one of the most accessible funding options for businesses that take card payments, but many business owners don’t fully understand the requirements or how it works.

This guide explains merchant finance loan requirements, who qualifies, and how merchant cash advances actually function in practice.

What is merchant finance?

Merchant finance is a type of business funding designed specifically for businesses that accept debit and credit card payments. Instead of fixed monthly repayments, the lender takes a percentage of your future card sales until the agreed amount is repaid.

The most common form of merchant finance is a merchant cash advance.

What is merchant cash advance?

A merchant cash advance is not technically a loan. Instead, it’s an advance based on your future card sales. A lender gives your business a lump sum upfront, and repayments are taken automatically as a percentage of your daily or weekly card transactions.

This means repayments flex with your business performance. If you have a slower period, you repay less. If sales increase, repayment speeds up.

This structure makes merchant cash advances particularly useful for businesses with fluctuating revenue.

Merchant cash advance example

Here’s a simple merchant cash advance example to illustrate how it works:

• Your business receives: £15,000 advance
• Total repayment amount agreed: £18,000
• Repayment percentage: 12% of daily card sales

If your business takes £1,000 in card payments in one day, £120 goes to the lender and £880 stays with you.

If you only take £500 the next day, repayment is £60.

There are no fixed monthly payments, which reduces pressure during quieter periods.

Who is eligible for merchant finance?

Merchant finance is designed to be accessible, but lenders still have minimum criteria.

You may be eligible if your business:

• Accepts card payments regularly
• Has been trading for at least 3–6 months
• Has consistent monthly card turnover
• Is registered in the UK
• Has a business bank account
• Operates in an eligible industry

Unlike traditional bank loans, merchant finance focuses more on your sales performance than your credit score.

This makes it a strong option for businesses that may struggle to secure funding through conventional routes.

Merchant finance loan requirements in the UK

Merchant cash advance lenders UK typically assess the following:

1. Monthly card turnover

This is the most important factor. Most lenders require:

• Minimum £2,000–£5,000 in monthly card sales

The higher your card turnover, the more you can borrow.

2. Trading history

Most lenders prefer businesses trading for at least:

• 3 to 12 months

Longer trading history improves approval chances and funding amounts.

3. Consistency of revenue

Lenders want to see stable or growing sales rather than sharp declines.

Seasonal businesses can still qualify, but consistency helps.

4. Business type

Merchant finance is commonly used by:

• Retail shops
• Manufacturers
• Printers and packaging suppliers
• Restaurants and cafés
• Salons and barbers
• E-commerce businesses

For example, a manufacturing business like Rosewood Finance may use merchant finance to purchase raw materials, upgrade equipment, or manage large client orders without disrupting cash flow.

5. Card payment processing

Your business must accept payments via:

• Debit cards
• Credit cards
• Chip and pin machines
• Online card payments

The lender connects repayments directly to your payment processor.

How much can you borrow?

Funding amounts usually range between:

• £2,500 and £250,000+

The exact amount depends on your monthly card revenue. Typically, lenders offer advances worth 1–2 times your monthly card turnover.

For example:

• Monthly card turnover: £10,000
• Possible advance: £10,000–£20,000

How fast can you get merchant finance?

One of the biggest advantages is speed.

Typical timeline:

• Application: 10–20 minutes
• Approval: 24–48 hours
• Funds received: 1–3 working days

This is significantly faster than traditional bank loans, which can take weeks or months.

Advantages of merchant finance

Merchant finance offers several clear benefits:

• Flexible repayments: Repayments adjust with your sales volume.
• Fast approval: Quick access to working capital when you need it most.
• No fixed monthly payments: Reduces pressure during slower periods.
• Accessible for businesses with lower credit scores: Approval is based more on revenue than credit history.
• No need for property security: Most merchant cash advances are unsecured.

Things to consider before applying

Merchant finance is useful, but it’s not suitable for every situation.

Be aware of:

• Higher overall repayment compared to traditional loans
• Daily or weekly repayment deductions
• Impact on short-term cash flow

It works best when used for growth activities that generate additional revenue.

Is merchant finance right for your business?

Merchant finance is ideal for businesses that:

• Have steady card payments
• Need fast access to capital
• Want flexible repayment terms
• Cannot wait for traditional loan approvals

For manufacturing and supply businesses, it can help cover production costs, invest in equipment, and fulfil larger client orders without disrupting operations.

Final thoughts

Merchant finance provides a practical and accessible funding solution for UK businesses that rely on card payments. The requirements are straightforward, approval is fast, and repayments adapt to your sales performance.

Understanding merchant finance loan requirements helps you decide whether it’s the right tool for your business growth.

If your business has consistent card revenue and needs flexible funding, merchant finance could be one of the simplest ways to unlock working capital without the restrictions of traditional lending.