5 things to know about merchant cash loans

4 Aug 2021

If your business uses a cash terminal and takes card transactions, you could benefit from a merchant cash advance to help grow your business and enjoy a flexible repayment plan.

using merchant cash advances

Since lockdown restrictions started to lift in April 2021, there has been a 22% increase in the number of enquiries for merchant cash advances from SMEs in the UK, according to data from the NACFB Patron. 

Making the most of flexible alternative finance options such as merchant cash advance loans (or MCAs) is great for businesses who might not have any assets to offer, or may be fairly new to the business world.

We explore the top 5 things you should know about merchant cash loans and why they could be a great finance option to help your business grow:

1. Flexible repayments

One of the key benefits of merchant cash advances is the flexibility they offer when it comes to repaying them. They work by taking a percentage of every transaction you take as a business at the source, so the more sales you make, the higher the repayment and vice versa.

Once you’ve been approved by a lender, they’ll have direct access to your card terminal and be able to take an agreed portion of each customer payment you make. This is a popular feature of merchant cash advance loans as it removes the extra business admin that’s needed with other repayment plans.

2. Loans are based on your takings

Another great perk of an MCA is the amount of borrowing you’ll be able to apply for is based on your previous sales performance. Lenders can make quicker decisions when it comes to approving loans as they will use your cash terminal to understand your previous transactions.

This means you’ll only be able to borrow what your business can afford, helping to keep repayments manageable and stress-free.

paying instantly

3. You can have other business loans at the same time

If you need some extra support running your business, you’ll be able to apply for other business loans too, using merchant cash advance loans alongside any other loan you might need. This is another great feature of MCAs, as they don’t restrict businesses to just one kind of finance and with repayments being based on till transactions, you won’t have to pay anything back if you haven’t made any sales.

4. Quick to process

The gap between the time you apply to the minute your business receives the loan can be very fast. In fact, our lenders are able to access your previous transaction history and review your business bank account to make quicker decisions, compared to other financial products.

As lenders will be able to understand your financial situation, they can agree to lend set amounts that are tailored to your own business needs. This means you’ll be able to focus on growing your business without worrying about unmanageable debt.

5. You won’t need assets or other security

Lenders offering merchant cash advance loans don’t need the same kind of security as they would for other financial products making MCAs a good option for businesses without any assets. They allow businesses to borrow what they need without having to have assets or security.

As long as your business relies on regular customer payments via a cash terminal, you’ll be able to apply for a merchant cash advance. It’s important to note many lenders typically handle just a few types of cash terminals, so you’ll need to use one they recognise. 

Merchant cash advances are a flexible and faster way to use funding for your business.

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Vivek Seda
Vivek Seda

Asset Lending & Property Team Lead

Vivek Seda is the Asset Based Lending & Property Team Lead at Funding Options. Vivek has been in the commercial finance industry for over five years, helping SMEs in the UK access over £40m of funding in that time. He also supports the business on working on corporate finance and structured transactions successfully funding Acquisitions and MBOs for businesses.

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