Merchant Cash Advance
This is a business solution for the majority of business that already accept card payments. It’s a funding solution in the case that your business needs some help with cash flow. This could be ideal for starting businesses or those that are going through a hard time for any other reason. The idea for merchant cash advances has only really existed for a few years but it’s already had a significant impact on retail and leisure. It’s a way of using your card terminal to induce lending, great for businesses with few assets. It works well if you’re a business that takes a high number of payments. Then, when you need to repay, it’s simply taken as a proportion of sales that you make via the terminal each month.
What are the benefits?
The way that Merchant Cash Advance works is by offering unsecured funding to you. This is done as a balance to taking a portion of future card sales. This means that the repayment term is not necessarily fixed and that repayment is less likely to be struggle for you. Here are some of the finer points:
- Can get funding from £2,500 – 300,000.
- One fixed sum with no penalty fees or APR.
- Flexible and helpful repayment system.
- Higher approval rates than banks.
- 70% of eligible customers renew.
Other important things to note
Due to the highly flexible method of repayment, this can prove to be a far more preferable option than loans or other forms of lump sum repayments. It doesn’t require your credit score to be pristine and as a result 75% of applications are approved. For those with time constraints, there is generally a 24 hour decision-making period, with few applications falling outside of these times. The versatility on offer gives your business more room for success, as repayments are not the dreaded worry they sometimes can be. Pay back what you can, when you can.
A merchant cash advance can be less thorough and invasive than other forms of financing. When you as a business operate a card terminal, you have a card terminal provider. This provider will work with the merchant cash advance lender so there is full transparency as it pertains to your transactions. They can see the kinds and amounts of money that pass through your business. This can negate the need for any kind of credit check or other security safeguards to be put in place to assess you as a financial risk. Theoretically, any business that takes payments via a card terminal in this way can get a merchant cash advance. And due to being able to discuss repayment terms, there should be fewer issues when it comes to actually repaying.
Merchant cash advances probably aren’t for every business. You could view it as another risk when it’s added to your list of monthly outgoings. However, when you’re business ends up in a tight spot, there may be few better options. Even in the eventuality that your business isn’t successful or that there’s a longer-term issue, repayment may still be possible. The monthly repayments can look very attractive if you know that you can make the money back through card sales. In this way, it may be ideal for retail businesses where there is a very high volume of transactions.