Merchant Cash Advance

What is Merchant Cash Advance?

A Merchant cash advance also known as Business cash advance or PDQ loan. It’s an innovative funding solution which help SMEs to get finance up to £300,000. It’s a short term quick and easy funding solution which is loaned against business’s future credit and debit card sales.

It’s perfect for a business which takes card payments and needs a cash flow boost. There are no fixed monthly payments involved like most business loans but a percentage is set and repayments are done automatically each time a card machine payment is processed.

Funding is calculated on the flow of your business performance and repayments depends on the payments processed, if more payments are processed more repayments are made and vice versa.

This is an unsecured financial arrangement, which means any assets are not secured against these funds. Hence, this best suits UK based businesses that has a merchant account and process payments either through merchant gateway facility or PDQ card machine.

Is my business eligible for a secured business loan?

  • Sole traders, Limited company or Limited liability partnership (LLP) in the UK.
  • Actively Trading
  • Business Should accepts card
  • Monthly terminal transactions should be more then £2500

How does it work?

It’s a simple, flexible and quick funding option for Merchants which allows them to borrow finance from a lender and then make repayments comfortably through future customer card transactions.

Lenders will offer you finance which will be equal to your monthly turnover. There will be a fixed fee charged by the lender on the facility. So, whenever you are taking cards in the business a small amount goes to the total repayment.

Example: If a payment of £200 is processed through your card machine, you would keep £180 and the remaining £20 goes towards the repayment to your lender via your merchant bank account.

How much you can get?

Advance amount mostly ranges from £2,500 to £350,000. The average monthly card turnover decides the amount of money your business can borrow. More sales lead to larger advance and vice versa.

How long do you have to pay for your Merchant Cash Advance?

Though it depends on your Debit and Credit card processed payment, you will have to pay till the amount borrowed is paid off in full. Once you complete 50% of your total repayments you will be also eligible for top-up.

What are the advantages or merits of Merchant Cash Advance?

Merchant Cash Advance offers several advantages to the business. It’s an innovative funding solution so more and more businesses are opting for it. Some of the merits are listed below:

  • It offers more flexible payments as repayments depend on future credit and debit card processed sales.
  • One of the fastest ways to access cash for your business.
  • Credit scores of all business are considered.
  • Lesser risk of default repayment as a flexible amount is deducted as per card processed sales.
  • 0% interest charged on the money borrowed.
  • Business assets remain secured as no collaterals are required.
  • You may qualify for as much as 150% of your monthly card sales.

What are the disadvantages or demerits of Merchant Cash Advance?

Like any other business borrowings, Merchant Cash advance may suit some business more than the others. Merchant Cash Advance doesn’t really have many disadvantages but there are certain requirements which need to be met by the Business.

  • Merchant Cash advance is not suitable for businesses which do not accept card payments.
  • Since the eligibility criteria demands minimum 3 months card sales records, it’s also not suitable for startups and any business which possess less than 3 months of card sales records.
  • In some cases, lenders may require you to transfer to another merchant processor from your existing card terminal provider. In such cases, generally the process is managed for you as part of the agreement.

What are the documents required to apply for Merchant Cash Advance?

Generally, for approval of Merchant Cash Advance, 6 months of Business Bank Statement and 12 months of Business card statements are required. Or Open Banking.

How long does it take for a Merchant cash advance to get approved?

It usually takes anywhere between 24hrs to 72hrs for your Merchant Cash advance to get approved.

Frequently Asked Questions

If you take online payments then we arrange a simpler option.

Yes, you can pay off the loan early. You can also use certain amount of the approval.

We have more suitable options like Unsecured Business Loan.

Applications are not qualified only when they do not meet the set criteria for the funding. In instance, if your card takings are too low or you are just a start up but do not worry as both these instances are temporary. Once you achieve the required minimum sales on card i.e., £2,500 and you have 3months of card statement, you will be eligible to apply.

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