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Merchant cash advance

An advance against your future card sales, repaid automatically as a share of what your customers spend.

  • Free to use, no obligation
  • £5,000 to £2m+ for UK limited companies and LLPs
  • Matched to a broker who arranges merchant cash advance
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Free to useNo fees for businesses, ever
About a minuteOne short form, plain English
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What merchant cash advance is

A merchant cash advance gives your business a lump sum in exchange for a share of its future card takings. Instead of fixed monthly repayments, an agreed percentage of each card sale goes towards repaying the advance until the total is cleared. When sales are strong you repay faster, and in quieter periods you repay less. The cost is usually a fixed fee agreed at the start rather than interest charged over time.

It suits businesses that take a steady volume of card payments, such as restaurants, cafés, pubs, hotels, retailers, salons and other customer-facing businesses. Providers look mainly at your card transaction history, so it can be an option for companies with seasonal trade or few assets. Some providers offer a similar product based on overall revenue, often called revenue-based finance, for businesses that take payments online.

What businesses use it for

Seasonal preparation

Stock up, take on staff or market your business ahead of a busy period, with repayments that follow the pattern of your takings.

Refurbishment

Refresh a restaurant, bar, shop or salon, spreading the cost through future card sales rather than taking cash out of the business all at once.

Equipment and repairs

Replace a broken oven, coffee machine or till system quickly, so the business can keep trading without a long wait for finance.

Smoothing cash flow

Cover rent, supplier bills or other costs during quieter months, without a fixed repayment that stays the same when sales dip.

How it works

1Card sales are reviewed
The provider looks at your card terminal statements, usually covering several recent months, to understand your average takings. This largely determines how much it is prepared to advance and on what terms.
2You agree the terms
You agree the advance, the total amount repayable and the percentage of each card sale that will go towards it. The total is fixed at the start, so you know exactly what you will repay.
3Repayments follow your sales
Once the advance is paid, the agreed percentage is taken from card transactions, either through your card terminal provider or by regular collections. This continues until the full agreed amount has been repaid.

What lenders look at

Every lender has its own criteria, but these are the things they usually check.
Monthly card takings and how consistent they are
How long the business has taken card payments
Your card terminal provider
Type of business and sector
Credit history of the business and its directors

To use Loanleaf

  • UK limited company or LLP
  • Trading for 6 months or more
  • Annual revenue of £50,000+
  • Borrowing £5,000 or more
Check your options

Things to consider

Cost

Because the cost is a fixed fee rather than an annual interest rate, it can be hard to compare with a loan. If sales are strong and you repay quickly, the effective cost can be high. Ask for the total repayable and compare it with other options.

Regulation and contracts

Merchant cash advances for companies are generally not regulated by the FCA, so protections that apply to some other credit may not apply. Read the agreement carefully, including what happens if takings fall or you change card terminal provider.

Ongoing share of takings

A share of every card sale goes to the provider until the advance is repaid, which reduces the cash coming into the business. Make sure the remaining takings will still cover your running costs comfortably. Some providers also ask for a personal guarantee.

Merchant cash advance: questions and answers

How is a merchant cash advance repaid?
Through an agreed percentage of your future card takings. Each time a customer pays by card, part of that payment goes towards the advance until the total agreed amount has been repaid. There are usually no fixed monthly instalments.
How much can I get?
The amount is usually linked to your average monthly card takings. Providers review recent card terminal statements and decide what they are comfortable advancing. A broker can tell you what is likely based on your figures.
How does the cost work?
Rather than interest, you usually pay a fixed fee agreed upfront, added to the amount advanced. The total you repay does not change if it takes longer than expected, but repaying quickly can make the effective cost higher than it first appears.
Do I need to change my card terminal?
Not always. Some providers work with a range of card terminal providers, while others need you to use a specific terminal or account. A broker can explain the options and which providers work with your current set-up.
What if my sales drop?
Because repayments are a percentage of card takings, you repay less when sales fall. The advance takes longer to clear, but the total amount repayable usually stays the same. Check the agreement for any minimum payment terms.
How can Loanleaf help?
Loanleaf is an introduction service, not a lender or broker, and we don’t give advice. You answer one short form about your company and what you need, and we match you with a specialist finance broker who works with merchant cash advances. It’s free to use and there’s no obligation to go ahead. The broker will explain any fees of their own.
Ready to compare your options?
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