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Merchant Service Finance

A Merchant Service Cash Advance is a short term unsecured advance that is loaned against your future debit or credit card sales

What is a Merchant Cash Advance?

Put simply, a merchant cash advance uses your credit card terminal to ‘secure’ lending. It’s perfect for businesses who may not have many assets, but who have a good volume of card transactions every month. Repayments are taken as a proportion of your revenue, making it a quick and easy funding solution for many businesses small or large.

A merchant cash advance provider gives you an upfront sum of cash in exchange for a slice of your future sales. It’s different to a standard loan as instead of making one fixed payment every month over a set repayment period, with a merchant cash advance you make daily or weekly payments, plus fees, until the advance is paid in full.

What Is A Merchant Cash Advance?

Put simply, a merchant cash advance uses your credit card terminal to ‘secure’ lending. It’s perfect for businesses who may not have many assets, but who have a good volume of card transactions every month.

What Are The Advantages?

Since you repay your merchant cash advance based on your daily credit card sales, you’ll end up paying less when sales are down and more when they are up.

What Do I Need To Consider?

As with all borrowing, lenders have to assess the risk you pose to them, so the amount you can usually borrow depends on your turnover.

What are the advantages?

Since you repay your merchant cash advance based on your daily credit card sales, you’ll end up paying less when sales are down and more when they are up. This can be a good thing, because unlike other loans with a set repayment schedule, you won’t owe more than you’ve earned in a certain period of time.

The amount you pay back is also an affordable percentage of your daily card takings. You repay at the pace your business grows. And if business is a bit slow, your repayments are reduced automatically.

Any business that uses a card terminal to take payments from customers will have a card terminal provide. This is the company that processes the payments taken. With a merchant cash advance, the lender works with the terminal provider, so they have visibility on how much money is flowing through your business. That means that unlike other types of lending, there’s no need for credit checks or a detailed look into your accounts.

A Lender Can See Your Average Takings

Also, because the lender can quickly see what the business makes over an average month, they can agree a loan amount and a repayment plan much faster than with other options, so it can be a great solution for businesses that need cash fast.

Taking out a cash advance also has no direct impact on your credit or credit score, and the money is repaid automatically until the debt is paid.

Merchant cash advances are also unsecured, so you don’t have to forfeit any personal or business assets if your sales plunge and you fail to repay.
Your provider may however require a personal guarantee, that makes you personally responsible for repaying the advance.
If this is the case, the MCA provider may still try to recoup any losses in the event you default on the original agreement.

Things to consider

As with all borrowing, lenders have to assess the risk you pose to them, so the amount you can usually borrow depends on your turnover.
If you want to borrow £5,000 but your business makes £1,000 per month, you’ll be unlikely to secure that level of lending via these means, because it’s not in line with your cashflow position. The general rule-of-thumb is that you’ll be able to get finance equivalent to what your business receives in an average month.
Merchant cash is best suited to firms who do the majority of their business via a card terminal. If your company takes card payments but also invoices customers and receives bank transfers etc you’ll only be able to borrow against the monthly card transaction value.
If your cashflow situation is positive, a merchant cash advance could be a great way to secure fast and straightforward business finance and get your business on the right track.

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How We Can Help

We have a wealth of information on the various Merchant Cash Advance providers and borrowing options and so for a free no obligation consultation fill out your details on the fact finder form below and one of our Senior Advisers will be in touch asap

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