Compare Merchant Cash Advances

Compare Merchant Cash Advances

Different to most other types of business loans, a merchant cash advance is a way for UK businesses to borrow money but pay it back through their future profits, rather than having to pay a monthly fee. This arrangement will suit some businesses but not others, so is worth considering when weighing up your options.

If you feel that a merchant cash advance would suit you as a sole trader, small business, start up or limited company, take a look at our comparison tables to find out the best business cash advance provider for you.

What is a merchant cash advance?

• Receive a lump sum, based on your current income through card payments
• Lender will automatically take a small percentage of each card payment you receive
• This will allow you to pay back the cash advance without having to make monthly repayments
• Will only suit businesses who take card payments

A merchant cash advance is where you receive a lump sum from a lender, but make repayments in the form of a small percentage taken off each of your card transactions. This is an alternative to a standard business loan, where you will make repayments on a monthly basis until you pay off the full amount plus interest. A merchant cash advance is the equivalent of an unsecured business loan, since it’s not secured against any high-value assets.

This will suit certain businesses who receive the majority of their income through card transactions, such as retail, hospitality or even tourism, amongst many others.

If this is the case, you can then decide on how much you would like to borrow and therefore what percentage of each transaction you would have to pay towards the cash advance. This should hopefully allow you to calculate how many transactions you would need to process to pay it off, and subsequently how long that would take.

How can I apply for a merchant cash advance?

Since a merchant cash advance isn’t the same as a standard business loan, it means that it is actually easier to apply for. In fact, you will likely find that most lenders will require no credit check with a merchant cash advance application, since it is based on your future sales rather than your ability to make repayments which is indicated by your credit score or credit report.

You will have to provide relevant business details along with information about your income through card transactions. This will help a lender decide on whether they’re happy to take a small portion of your future sales.

The amount you can borrow as a lump sum will be based on your current income through card payments, as these will indicate to a lender how much they will then receive from each transaction. For example, if you take £500 per month in card payments, that means that your annual income from this will be around £6000. Since it is only a small percentage of each transaction, the lender would then have to calculate how much in total they would be willing to lend you as a business.

Am I eligible for a merchant cash advance?

Conveniently, you won’t usually have no credit check when applying for a merchant cash advance, meaning there’s more of a likelihood of you being accepted for this form of borrowing, even if you have a bad credit score.

However, instead of being able to choose how much you would like to borrow before applying, the amount that you are able to borrow is usually dictated by how much you earn per year through card transactions. That means the more you earn through these transactions, the more you would be eligible to apply for in the form of a merchant cash advance.