A Guide to Merchant Cash Advances

merchant cash advance - borrow against card terminal receipts

If you need an injection of cash for your business, there are now many different and increasingly flexible alternative finance products available to suit your unique requirements.

One of the more recent and most innovative among them is the merchant cash advance. So what exactly is a merchant cash advance, and is it a suitable form of finance for your business?

Incredibly popular among retail and leisure businesses, merchant cash advances are relatively easy to secure, offer simple repayments and can be used alongside most other forms of finance.

If you’re not already familiar with the concept, here’s a quick guide to merchant cash advances.

What is a Merchant Cash Advance?

Merchant cash advances are for businesses that use a card terminal to process customer payments. It essentially enables you to borrow against the money being processed through that terminal on a monthly basis.

The amount you can borrow is generally equivalent to a month’s turnover. So, if your monthly turnover is £2,000 per month, you should be able to borrow up to that amount.

The lender will work with your card terminal provider so they can see first-hand how much money is going through your business every month. This makes it much easier to secure than other forms of finance.

Repayments are taken directly at source and as a proportion of your income, which means that once the merchant cash advance is in place, you don’t need to give the repayments any further thought.

Another great advantage of merchant cash advances is that rather than being fixed, the repayments are proportionate to your card terminal revenue and will rise and fall in line with it.

Is a Merchant Cash Advance suitable for my business?

As we mentioned, merchant cash advances are for businesses that use card terminals to take payments and this makes it a popular choice for those in the retail and leisure sectors.

It’s best suited to businesses which take the majority of their payments via card transactions. To make it a worthwhile form of funding – i.e. funding through which you can borrow a sizeable, useful amount of money – you’d need a significant proportion of your revenue to come from card payments.

Other than these few parameters though, merchant cash advances are pretty easy to obtain without the need for credit checks, accounting evidence or other assets in the business.

A merchant cash advance: is a good way to get funding if your business doesn’t own a lot of physical assets or property to use as security on a loan, for instance.

Why use a Merchant Cash Advance?

Because merchant cash advances are so easy to secure, simple to organise and flexible to repay, this is a great funding option for providing that quick injection of cash you might need fast, perhaps in an financial emergency or to improve cashflow.

The flexible repayment feature, which links the amount you pay back each month to the amount of money being processed through your card machine means it’s also great for businesses that experience seasonal peaks and troughs. So you repay more when times are good, and repay less when there’s less money coming in.

Merchant Cash Advances – Features

In a nutshell, merchant cash advances have some great features which make them a really handy form of business finance:

  • Available to pretty much any business that uses card terminals to process the majority of their sales
  • Flexible and scalable; level of borrowing and repayments proportionate to revenue
  • Amount you can borrow depends on your turnover
  • Quick and easy to secure with no credit checks or complicated applications
  • Repayments taken at source, so it is all taken care of for you
  • Can be taken out alongside other forms of credit you may already have
  • Some lenders only work with particular card terminal providers, so you need to do your research and check

Get a Merchant Cash Advance Quote

You can quickly get a merchant cash advance quote with Funding Options, who can help you find any type of funding. Their award-winning technology searches the market to find the right funding for your situation and gives you a no-obligation in just a few minutes.

What’s more, their experienced team is always on hand to help you with any questions. Find out more at the Funding Options website.

Final thoughts

The rise of the alternative finance market in recent years has brought with it some really innovative and handy tailor-made funding options, and merchant cash advances are one of them.

As long as you use card terminals, this is a really quick, stress-free way of getting access to some additional cash, whether it’s an emergency situation, you need to fund growth, or you’re simply looking to boost cashflow.

More on funding a business

ByteStart is packed with help and tips on all aspects of starting and funding your business. Check out some of our most popular guides;

Funding your business

Cashflow

Crowdfunding

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