![]() Merchant cash advance lenders are able to quickly assess your business’s monthly card sales turnover. Receive fast access to cash for your business: Repayments are based on your card sales, which means you keep 100% of the money you make through cash sales. With this type of funding, you only repay when you process customer card payments. ![]() All business credit scores are consideredįlexible repayments based on future credit and debit card sales:.No interest charged on the money borrowed.Receive fast access to cash for your business.Flexible payments based on future credit and debit card sales.The benefits of business cash advances include: As it increases in popularity, more and more businesses are opting for this innovative funding solution. What are the benefits of a merchant cash advance?Ī merchant cash advance offers several advantages to UK SMEs. You can benefit from a fast cash boost without the usual restrictions associated with traditional loans there may well be no credit check and approval is pretty quick, often on the same day of application. Instead, it is an advance on the money your business is forecasted to generate and works by selling future debit and credit card revenue to the lender. In this case, it will cost £2,000.Īlthough it can be referred to as a card processing loan and a PDQ loan, a merchant cash advance is in fact not a loan. The fees are worked out by just multiplying the amount you borrow by the factor rate (£10,000 x 1.20 = £12,000). The factor rate will vary significantly depending on your business industry, risk and trading performance, but you can expect it to range between 1.1 to 1.5.įor example, if you borrow £10,000 and the factor rate offered is 1.2, you’ll repay a total amount of £12,000. You can compare your merchant cash advance rates by using our calculator.Ī factor rate, shown as a decimal figure, is used to calculate how much the advance will cost you rather than a traditional interest rate percentage. It is intended for use as a comparison guide in relation to quotes you may have already received or as a starting point during your initial enquiries. Our merchant cash advance calculator is designed to offer you an estimate of how much you could borrow and the total repayable amount, including factor rate costs. The more sales you process, the larger the cash advance you can receive. The amount of money your business can borrow will depend on your average monthly card turnover. Typically, most advance amounts can range between £2,500 and £300,000. Remember, you only pay back when you sell to customers. The payback period is flexible and may be shorter or longer, depending on sales. The shop turns over £10,000 on average every month in card sales and is expected to repay £1,000 (10%) every month until the loan is fully repaid.Īs there is no fixed term, it is predicted the business will repay the total advance amount of £6,000 in approximately six months. The owner also agrees that 10% of the business’s card sales will be used towards the repayment of the loan. Here’s an example of a typical repayment scenario:Ī small independent retail shop borrows £5,000 to buy stock and agrees to repay £6,000 at a factor rate of 1.2. So, if you processed £100 through your card machine, you would keep £90, and the remaining £10 would be paid automatically to the lender via your merchant bank account. When it comes to paying back the money borrowed, an agreed percentage (usually around 10%) is deducted from each of your card sales until the advance is paid off in full. The lender will usually advance a capital amount equal to that of your company’s monthly card sales turnover. ![]() It allows businesses to borrow an amount of money from a lender and then make repayments comfortably through their future customer card transactions. How does a merchant cash advance work?Ī merchant cash advance is a straightforward and flexible form of funding. Instead the funding is loaned against your business’s future credit and debit card sales.įor this reason, a merchant cash advance is suited to any UK business that has a merchant account and processes card payments through a PDQ card machine or merchant gateway facility. This financial arrangement is unsecured, which means it is not secured against any of your company’s assets.
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