Merchant Cash Advance

Loans from £5,000 to £10m

  • No fee & no obligation consultation
  • Application pre-approved in minutes
  • Only pay for funds you use
  • Quick access to cash
  • Credit score not impacted
  • 5* trust rating
  • FCA Reference no. 987366

    What is a Merchant Cash Advance?

    A merchant cash advance is a flexible and affordable alternative to an unsecured business loan, providing immediate cash injections to support your SME. Also known as a business cash advance or merchant business loan, merchant cash advances are charged at a fixed rate based on a 1.10% factor rate with no APR and no additional costs.

    With merchant advance loans, a business can borrow anything from £3,000 to £300,000 for improved cash flow. Loan costs are paid over the course of 6 to 8 months and charged a fixed percentage of future debit and credit card sales.

    Merchant business loans have become a popular alternative to traditional cash advance products. With fees payable only on the basis of card sales made from your PDQ machine, a merchant advanced loan can support your business during peak times and slower periods.

    Best of all, you do not have to provide any assets as security for an MCA loan, which is arranged as a 100% unsecured product.

    For more information on any of the above or to discuss your requirements in more detail, contact a member of the team at Rosewood Finance today.

    Cash Advance

    How Merchant Cash Advances Work

    One of the most appealing aspects of a cash advance business loan is how quick and easy the facility is to organise. There is no complex paperwork associated with conventional business loans, and the funds required can be accessed in as little as 24 hours.

    A brief overview of how the application and repayment process works:

    • Apply Online: Complete and submit a simple online application with the full help and support of the team at Rosewood Finance. If you run any type of business that collects payments using a card terminal machine, you may be eligible for a merchant cash advance.
    • Receive Your Funds: The amount you can borrow will be determined on the basis of your average monthly card sales and total overall sales volumes. If your application is successful, the funds will be transferred promptly into your business bank account, perhaps even on the same day.
    • Repay Gradually: With an MCA, you’ll benefit from the flexibility to repay your loan at a rate that aligns with the performance of your business. Instalments are collected on the basis of subsequent credit card transactions, usually between 10% and 20%, as agreed with your lender. You will therefore repay more when business is good and less (or nothing at all) during slower periods. Unlike a traditional business loan, there are no “fixed” monthly repayments that have to be made, providing small businesses with welcome flexibility.

    Borrowing costs vary significantly from one product or lender to the next.

    At Rosewood Finance, we can help you secure a cash advance at short notice.

    What is Factor Rate?

    Where a lender quotes a “factor rate”, what you are essentially looking at is the total overall borrowing costs of the facility in question. Factor rates are commonly used to indicate the costs of merchant cash advance services, as opposed to typical interest rates. The key difference between the two is that while interest is indicated as a percentage of the loan balance and accrues throughout the life of the loan, a factor rate represents the total cost of the facility (including all associated fees) and is fixed.

    In practice, this would mean that a business taking out an MCA of £10,000 with an agreed factor rate of 1.2 would repay a total of £12,000. This amount will not be subject to change, irrespective of the length of the agreed repayment period.

    What Are the Advantages of a Merchant Cash Advance?

    Sourced from a specialist lender, an MCA can bring countless advantages over a conventional business loan. These include:

    • Fast-Access PDQ Funding: Applications are processed practically instantaneously, and decisions are returned quickly, often resulting in access to the funds required in as little as 48 hours.
    • Zero Credit Risk: The application will not provide a negative entry on your credit rating.
    • Costs: The fact that all fees and charges are both agreed upon in advance can add to total cost transparency.
    • No New Equipment: Alleviates the need to purchase any additional equipment to be accepted. All you need is your standard card payment terminals.
    • Flexible Repayments: With an MCA, your repayments are tied to your card takings, ensuring you only repay as much as you can afford each month.
    • No Security Required: All finance is issued in the form of unsecured loans, so you will not need to provide any assets of value or a guarantee as collateral.

    For more information on any of the above or to discuss how an affordable merchant cash advance could benefit your business, call Rosewood Finance anytime for an obligation-free chat.

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

    The key difference between an MCA and a mainstream business loan lies in its accessibility and flexibility. Before applying for a conventional business loan, consider how an MCA could be a more convenient and cost-effective option for your business. Here’s how:

    • Repayment Terms: With a business loan, your monthly repayments are fixed, irrespective of how your business is performing at the time. With an MCA, your repayments are tied to your takings; you pay more when business is good and less (or nothing at all) during slower times.
    • Approval Process: It can take anything from several days to a few weeks to approve a business loan, which typically needs to be submitted alongside complex and extensive documentation. With an MCA, you simply need to provide evidence of your card transaction values and the general financial performance of your business at the time.
    • Costs: An MCA may have a higher APR than business loans, but this is due to the fact that they are strictly short-term facilities. As the funds issued are repaid much more promptly, the actual interest paid on an MCA can be much lower than on a comparable business loan.

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

    Merchant Cash Advance infographic displaying the comparison to bank loans

    For more information on the functions and benefits of a PDQ advance or to discuss any aspect of your requirements in more detail, contact the Rosewood Finance team today for an obligation-free consultation.

    Grow Your Business!

    A cash advance can potentially help a business grow by providing access to quick PDQ funding for various purposes, such as:

    • Purchasing inventory: A common use of merchant cash advances is buying essential products and inventory to meet demand or to purchase stock in bulk at discounted rates.
    • Marketing and advertising: Businesses often use short-term funding solutions like merchant loan advances to cover their immediate marketing and advertising costs, which may otherwise put a major dent in their working capital.
    • Upgrading equipment: Covering the costs of planned or unexpected equipment upgrades or replacements often calls for third-party funding.
    • Expansions and renovations: The same also applies to businesses looking to expand, renovate, or even relocate to new premises. The flexible nature of an MCA makes it an ideal facility for funding ambitious and essential projects like these.
    • Hiring additional staff: Funds can be used to hire additional staff to manage increased demand, which can help a business grow by improving customer service and expanding operations.

    Can you get a Merchant Cash Advance with Bad Credit?

    Yes, but it is important to remember that not all lenders will issue financing to subprime applicants. Lenders who are willing to consider your application may quote you a higher rate of interest. Many MCA providers focus more on the business’s revenue and sales history than the credit score of the business owner. However, having bad credit can still be a red flag for lenders, and it may affect the terms and conditions of the MCA.

    If you have bad credit, it’s important to shop around and compare the terms and fees of different MCA providers. More specifically, it’s advisable to take your business directly to a lender that specialises in poor credit (aka subprime) loans, where your imperfect credit score is likely to be less of an obstacle.

    Before agreeing to a subprime MCA (or any similar credit facility), take the time to review the terms and conditions of the contract in full.

    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), Payoneer.com can qualify for a merchant cash advance like any conventional store.


    What is an Immediate Cash Advance for Merchants?

    The basic premise behind advance cash loans like these is to enable a business to gain immediate access to the funds it needs for any purpose, based on future card sales. In short, it enables a business to unlock its future revenues in advance, similar to a conventional business loan.

    Merchant cash loans are repaid with a percentage taken from future card sales. This continues until the advance is paid off in full, complete with fixed costs agreed in advance (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 been trading for at least three months, 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?

    Pricing is unique for each merchant cash advance agreement. A merchant cash advance loan will always have a fixed cost that is not subject to change. All borrowing costs will be clearly laid out in advance so that you know exactly how much you owe. The total balance of the loan plus all borrowing costs will then be repaid gradually as you collect card payments on a monthly basis. There are no hidden charges, and you will only repay your loan when card payments are collected; all the cash your business takes is yours to keep.


    Will my application influence my credit score?

    No, you can apply for a business cash advance and receive a decision in principle without any credit checks being performed. However, a full credit search may be performed as part of the formal application process, which will be recorded on your credit file. It is therefore essential to carefully consider your eligibility for a merchant cash advance before submitting your application. Contact a member of the team at Rosewood Finance at any time for more information.


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

    Yes, in fact, many independent lenders specialise in these kinds of ‘subprime’ products. Increasingly, lenders are acknowledging that imperfect credit is by no means an indication of an underperforming or irresponsible business. If the rest of your financial profile is on par, you have every chance of qualifying for a competitive cash advance loan. Even so, it is important to ensure you target the right lenders with your applications, i.e., those who welcome subprime applicants.


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

    Merchant cash advance loans are typically available from £3,000 up to around £300,000. Maximum loan value is calculated on the basis of average monthly card revenues and total combined takings. This means that the more money your business takes by way of card payments, the more you can borrow in the form of a merchant cash advance. Some lenders cap their maximum loan values at 100% of a company’s monthly card takings, while others will offer up to 150%.


    Are there monthly repayments?

    No, there are no fixed repayments whatsoever with a merchant cash advance. The facility works in an entirely different way than a conventional loan, with no scheduled payments and no APR. Instead, a percentage is automatically deducted from all future card sales (typically 10% to 25%) until the full balance of the loan has been repaid. Merchant cash advances are therefore designed to support your business during difficult times and allow rapid repayment when business is good.


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

    Terms and conditions are flexible, ensuring merchants are provided with all the time they need to comfortably repay their loans. With a merchant cash advance, the facility is automatically repaid when card payments are taken from the customer. This means that you will repay more when your business is performing strongly and less during slower times. Generally speaking, repayment timeframes can be anything from three months to 18 months, depending on the terms and conditions of your agreement.


    Does the FCA regulate business cash advances?

    Merchant cash advance facilities are not currently FCA-regulated, emphasising the importance of working with an established and 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 biggest benefit of a merchant cash advance is the way in which repayment of the facility automatically aligns with the performance of your business. You only repay when you take card payments, which means you pay more when your business is performing well and less during slower times. In addition, there is no APR with this kind of cash advance loan, which means that your overall debt will not increase over time. Instead, all borrowing costs are fixed and disclosed ahead of time.

    If you would like to learn more about the potential benefits of business cash advances on your PDQ terminal or have any questions regarding your eligibility for merchant commercial finance, contact a member of the team at Rosewood Finance today.

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