Merchant Cash Advance

How Merchant Cash Advances Work

The fact that a cash advance business loan is quick and simple to set up is one of its best features. Traditional business loans don’t require a lot of paperwork, and you can get the money you need in as little as 24 hours.

A quick rundown of how to apply for and pay back the loan:

• Fill out an online application: With the help and support of the Rosewood Finance team, fill out and send in a simple online application. You might be able to get a merchant cash advance if you run any kind of business that takes payments with a card reader.
• Get your money: The amount you can borrow will depend on how many cards you sell on average each month and how many cards you sell in total. If your application is approved, the money will be sent right to your business bank account. You might even get the money the same day.
• Pay it back over time: If you get an MCA, you can pay back your loan at a rate that works with how well your business is doing. Your lender will deduct payments based on future credit card purchases, typically ranging from 10% to 20%. So, you’ll pay back more when business is flourishing and less (or nothing at all) when it’s bad. There are no “fixed” monthly payments required, unlike a regular business loan. This gives small businesses a lot of freedom.

The costs of borrowing change a lot from one product or lender to the next. If you need a cash advance quickly, Rosewood Finance can help you get one.

What is Factor Rate?

When a provider gives you a “factor rate,” you’re really just looking at how much it costs to borrow money for the whole facility. Instead of interest rates, factor rates are often used to show how much merchant cash advance services cost. The main difference between the two is that interest is shown as a percentage of the loan amount and builds up over the life of the loan, while a factor rate shows the fixed cost of the facility, which includes all fees.

This means that a company borrowing £10,000 with an agreed-upon factor rate of 1.2 would have to pay back a total of £12,000. In spite of how long the agreed-upon repayment term is, this amount will not change.

What Are the Advantages of a Merchant Cash Advance?

If you get an MCA from a specialist lender, it can have many benefits over a regular business loan. Some of these are:

• Fast-Access PDQ Funding: Applications are processed almost instantly, and decisions are made fast. This means that you can often get the money you need in as little as 48 hours.
• Credit: You won’t have to worry about your credit score going down because of the application.
• Costs: It can be easier to understand all costs if all fees and charges are agreed upon ahead of time.
• No New Equipment: This means that you don’t have to buy any extra equipment in order to be accepted. You only need normal terminals for taking cards.
• Flexible Repayments: MCAs offer flexible payment plans based on monthly income, allowing you to repay only what you earn from the card.
• No Need For Security: All of the money is given out as unsecured loans, which means you won’t have to put up any valuable items or a guarantee as security.

Call Rosewood Finance at any time for a free, no-obligation chat to learn more about any of the above or to talk about how a cheap merchant cash advance could help your business.

How is a Merchant Cash Advance Different to a Business Loan?

The major difference between an MCA and a regular business loan is that an MCA is easier to get and gives you more freedom. If your company needs a traditional business loan, an MCA may be easier and cheaper. How to do it:

• Terms for paying back the loan: If you get a business loan, your monthly payments will stay the same no matter how well your business is doing. When you have an MCA, your expenses depend on how much money you make. When business is good, you pay more, and when it’s slow, you pay less or nothing at all.
• Approval process: Getting a business loan approved can take anywhere from a few days to a few weeks, and a lot of complicated paperwork needs to be sent along with it. With an MCA, you just need to show how much your card transactions were worth and how well your business was doing financially.
• Costs: The costs of an MCA may be higher than the APR on a company loan, but this is because MCAs are only good for a short time. The interest paid on an MCA can be much cheaper than on a similar business loan because the money is paid back much more quickly.

The below graphic explains how merchant loan advances and bank loans differ:

For more information on how a PDQ advance works and what it can do for you, or to talk about any part of your needs in more detail, contact the Rosewood Finance team today for an obligation-free consultation.

Grow Your Business!

A cash advance can significantly contribute to a business’s growth, particularly for new businesses, as it provides them with immediate access to funds for various purposes.

• Buying inventory: One popular way to use merchant cash advances is to buy inventory and essential goods to meet demand or to buy a lot of stock at a discount.
• Marketing and advertising: Companies use short-term loans like merchant loan advances to pay for their advertising and marketing costs right away, which would otherwise use up a lot of their working capital.
• Buying new or better equipment: Getting money from a third party is often needed to pay for planned or unplanned equipment purchases or changes.
• Additions and renovations: The same goes for businesses that want to add on, change, or even move to a new location. Because MCAs are open, they are perfect for funding big, important projects like these.
• Hiring more staff: The money can be used to hire more staff to handle higher demand. This can help a business grow by making operations bigger and serving customers better.

Can you get a Merchant Cash Advance with Bad Credit?

Yes, but it’s important to keep in mind that not all lenders will give loans to people with bad credit. A lender who is willing to look at your application may offer you a higher interest rate. A lot of MCA providers care more about how much money the business makes and how long it has been in business than about the owner’s credit score. Lenders may still be wary of people with bad credit, and it may change the terms and conditions of the MCA.

If you have bad credit, you should look at more than one MCA provider’s terms and fees. To be more specific, you should go straight to a lender that deals in bad credit (also called “subprime”) loans. Your bad credit score is likely to be less of a problem there.

Spend some time reading through the whole subprime MCA (or any other similar credit facility) agreement before you agree to it.

What’s the difference between a business cash advance and a merchant cash advance?

There is no difference: A ‘business cash advance’ is the same as a ‘merchant cash advance’

Can I get a merchant cash advance if I take payments online?

Yes, cash advance loans are open to any business that takes card payments, irrespective of whether they use a physical PDQ terminal. Online businesses that take card payments using any popular provider: Worldpay.com, Stripe.com, PayPal.com, Shopify.com, Amazon Pay, Opayo.co.uk (formerly Sage Pay), and Payoneer.com can qualify for a merchant cash advance like any conventional store.

What is an Immediate Cash Advance for Merchants?

The main idea behind these kinds of advance cash loans is to give a business quick access to the money it needs for any reason, based on future card sales. In short, it lets a business get access to its future profits early, which is a lot like a normal business loan.

We repay a merchant cash loan by deducting a percentage from future card sales. This keeps going until the advance is paid off in full, along with set costs that were agreed upon ahead of time (no APR and no hidden costs).

Will I be eligible for a merchant cash advance?

In order to qualify for an immediate cash advance, your business will need to have had 3 months of trading, with a minimum monthly card turnover of £2,500. In addition, you must be a limited company, partnership, or sole trader based in the UK and take regular card payments using a PDQ or online payment gateway. Your provider will also take into account your credit history and the general financial status of your business when evaluating your application for a merchant business loan.

How much will the merchant cash advance cost?

Each merchant cash advance agreement has its own set of prices. An advance loan for a business will always have a set fee that doesn’t change. You’ll know how much you owe because all money-related fees will be listed. Regular payments on the card will gradually repay the full loan amount and all associated fees. You only need to repay the loan when you receive a credit card payment, eliminating any hidden fees. You keep all the money your business makes.

Will my application influence my credit score?

Despite not checking your credit, you can apply for a business cash advance and receive a decision immediately. However, the official application process may include a full credit search, which will appear on your credit report. Because of this, you should carefully think about whether you can get a dealer cash advance before you apply. You can always get in touch with someone at Rosewood Finance to find out more.

Is it possible to get a cash advance loan with poor credit?

The truth is that a lot of private lenders focus on these “subprime” loans. Growing awareness among lenders that bad credit does not necessarily indicate a business’s poor performance or irresponsibility. You have a good chance of getting a cheap cash advance loan if the rest of your finances are in order. But even so, you should make sure that the lenders you send your applications to are the right ones—those that accept subprime prospects.

Is there a limit to how much my business can borrow?

A merchant cash advance loan can range anywhere from £3,000 to around £300,000. The maximum loan amount is based on the average monthly card sales and the total amount of money taken in. In other words, the more credit card payments your business gets, the more you can borrow through a dealer cash advance. Some lenders will only lend up to 100% of a business’s monthly card sales, while others will lend up to 150%.

Are there monthly repayments?

No, there are no set payments when you get a store cash advance. A traditional loan works in a very different way than this facility, which has no fixed payments and no APR. Instead, a certain amount is taken out of all future card sales (usually between 10% and 25%) until the full loan amount is paid off. So, merchant cash loans are meant to help your business through tough times and let you pay them back quickly when things are going well.

How quickly do I need to repay a merchant cash advance?

The terms and conditions are open, which gives merchants all the time they need to repay their loans without any problems. When a customer pays with a credit card, a merchant cash advance immediately repays the loan. This means that you will pay back less when your business isn’t doing well and more when it is. Your loan repayment period can be three to eighteen months, depending on your deal.

Does the FCA regulate business cash advances?

Merchant cash advance facilities are not currently FCA-regulated, emphasising the importance of working with an established, reputable provider. It is essential to check the background, track record, and reputation of a commercial finance specialist before applying for any of their products.

Why is a merchant cash advance better than a conventional loan?

The best thing about a merchant cash advance is that the flexibility of how you return the loan is built right into how well your business does. You only pay back when you accept credit cards, so when business is good, you pay more, and when it’s bad, you pay less. For this type of cash advance loan, there is also no APR, which means that your total debt will not grow over time. Instead, all of the costs of getting money are set and known ahead of time.

Talk to someone at Rosewood Finance right away if you want to know more about the possible benefits of business cash advances on your PDQ terminal or if you have any questions about whether you are eligible for retail commercial finance. We’ll use our merchant cash advance loan tool to make sure you get the best cash advance loan and give you all the information you need about this type of loan.