Merchant Cash Advance: How It Can Help You Fund Your Business
Do you need funding for your business? If your business accepts credit or debit card payments from your customers you could qualify for a merchant cash advance.
Typically, funding starts at £2500 and goes up to £300,000. It’s an easy, straightforward funding solution that will work with your business cash flow.
This type of funding is unlike a traditional bank loan where you pay a set amount on your loan each month. With a merchant cash advance, you repay as and when you make sales on credit card transactions. Typically, your repayment amount will be 10% – 18% of each future sale transaction until your merchant cash advance is paid in full.
How It Works
The lender determines the total payback amount for a this type of cash advance by using what is known as a “factor rate.” For example, if your business takes £5000 on monthly card turnover, you could qualify for an advance of £5000. This could start at a factor rate of 1.23 and rise according to the offer.
In this case, your total repayment on a merchant cash advance of £5000 with a rate of 1.23 would be £6150. You would repay this amount as and when you make sales. A merchant cash advance has no hidden fees, early or late repayment penalties or associated charges. The only set cost is the factor rate.
Typically, you can expect to raise an amount equal to that of your monthly credit and debit card turnover. However, in some hybrid cases, your total business turnover, including your cash sales, may be taken into account when determining the advance value. But generally, you can expect to raise between 100% to 150% of the value of your card sales turnover.
A Merchant Cash Advance Is a Lenient Way to Borrow
A merchant cash advance is forgiving with your balance sheet, too. When your business has a slow month on sales you pay back in line with those lower sales, relieving you of the stress of meeting any required traditional repayment structure. This makes it one of the most flexible methods of borrowing in the commercial finance sector.
You Can Use A Merchant Cash Advance for Any Purpose
You can use your merchant cash advance for any purpose, including buying stock, premises refurbishment, buying assets for the business, marketing costs, general cash flow and tax funding.
Poor Credit? No Problem
If you or your business has a poor credit rating, that won’t affect your application. Lenders don’t usually take a poor credit score into account for this type of business funding. If you like, you can easily check your eligibility by clicking here.
So if you’ve been scratching your head, wondering what to do about your business’s cash flow issues, worry no more. Help your business with a merchant cash advance and give it the boost it’s been needing.