What Is A Merchant Cash Advance?

For businesses that regularly take card payments, a merchant cash advance is an increasingly popular solution as an alternative finance product. If you are looking to bridge a funding gap or are struggling with cash flow, then a quick, easy and no-hassle funding solution may be just what you are looking for.

What Is A Merchant Cash Advance?

A merchant cash advance is where you enjoy a loan from a provider. You then repay the loan as the provider takes a percentage from your card transactions. You don’t have to worry about finding the funds to repay the lender. Instead, every card transaction contributes to repaying the loan. Once the loan is paid, the lender stops taking a percentage.

The system works by the lender partnering up with your card terminal provider. The lender will then have access to your card activity and will be able to see how much money is flowing through your business as card payments. To pay your loan back, the lender will then take a percentage of your revenue through card transactions. This is taken at the source of your card terminal provider, with the remainder being transferred into your account.

With the lender taking a proportion of your revenue, you don’t need to worry about calculating the percentage of the money you need to deliver to the provider. You also don’t need to worry about a long debt casting a shadow over your business. As long as you receive regular card payments, this type of financial product is usually repaid much faster than other lending methods.

As the lender only takes a percentage, you still receive some revenue through card transactions which can help with cash flow management.

Who Can Benefit From A Merchant Cash Advance?

A merchant cash advance can be a fantastic financial solution for businesses of any size, as long as they take a percentage of their revenue by card payments. Typically merchant cash advances suit retail, hospitality and leisure businesses.

Before agreeing to a loan, the lender will access your card payment activity and decide whether the number of transactions made by card will provide a prompt return of the loan. They will be able to see what your business earns in an average month, from there, they can then agree on a feasible loan amount based on your circumstances.

As the lender takes repayments directly through card payments, there is no need for credit checks or guarantees. You do not need to have valuable assets either. All your business needs to do is keep selling and keep using your card terminal to take payments.

Benefits Of A Merchant Cash Advance

  1. Flexible repayment

As you repay through future sales, you do not need to worry about fixed repayment dates and having money available. You have no pressure to find funds. Instead, you pay in alignment with the performance of your business.

  1. No APR

Unlike many other financial products, a merchant cash advance works out a percentage of your future card sales to repay the loan; you do not need to worry about unfavourable interest rates.

  1. No Assets

You do not need to put up assets as security for the loan. Usually around a year of positive trading with regular card activity will suffice.

Is A Merchant Cash Advance Right For Your Business?

If you use a card terminal regularly and are looking for a flexible way to achieve a business loan, get in touch with Funding Bay to find the best merchant cash advance deals for your business.




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