![]() ![]() ![]() For example, if a significant amount of your turnover comes from raising invoices and receiving payments via bank transfer, these receipts will never be included in a Merchant Cash Advance lender’s assessment. – If card terminal transactions don’t make up the bulk of your business’s receipts, a Merchant Cash Advance may not be the most suitable option for your business. Generally, lenders will calculate the amount they’re willing to lend as up to 100 percent of what your business takes through a card terminal in an average month. If you’re not turning over enough in a month to borrow the amount you want, your prospective lender will turn your application down. – The amount you’re able to borrow depends on your turnover. While there are a number of benefits, it’s important to weigh up the drawbacks, too. Other products, such as short-term business loans or asset finance may be a better fit. Keep in mind when you compare Merchant Cash Advances, that while there are many benefits, this type of financial solution doesn’t suit every type of business. It also means that when business is quieter, you won’t have to worry about managing to find money to pay a fixed amount, as when your revenues are smaller, your repayments will be, too. As the repayments are fixed as a proportion of your card sales, there’s no minimum repayment amount The more you sales you make, the bigger your repayments will be and the quicker you’ll pay off the loan. Since the percentage of card terminal sales is taken at source, there’s no risk on defaulting on payments and therefore no threat of late repayment charges. – There’s usually no requirement to use assets as security (such as property or equipment) so they won’t be at risk if you are unable to keep up with your repayments. – The setup for Merchant Cash Advances is quicker than for a traditional loan, with less paperwork, and in some cases be agreed and set up in as little as 24 hours. ![]() When making a Merchant Cash Advances comparison, you need to consider the pros and cons of taking out this kind of loan. There are a number of lenders that offer Merchant Cash Advances, and while their products all work in the same way, their interest rates, T&Cs and repayment terms may differ, so it’s prudent to compare Merchant Cash Advances to get the deal that’s right for your business. They’re deducted at source, in a similar way that income tax is deducted. Merchant Cash Advance lenders work with card terminal providers, so that when each credit/debit card sale is processed, a certain percentage of the receipts are used to immediately pay back the loan. When a business takes payments from customers through a credit card terminal, the transactions are processed by the card terminal provider. The application process is quicker and simpler than traditional business loans, but application success and the amount of the loan the business can borrow will still depend on factors such as average monthly turnover and how much the business can afford to repay. This means that the Merchant Cash Advance repayments are flexible, with payments increasing and decreasing depending on how much money the business makes. The business (the Merchant) borrows a lump sum from a lender and pays it back, usually on a daily basis, as a percentage of customer credit card sales, rather than a fixed repayment amount. But if those businesses have a strong, positive cashflow, then a Merchant Cash Advance is a good option to consider. For example, the leisure and retail sectors, such as shops, restaurants and bars can find it more difficult to secure finance. The concept is relatively new but is becoming more popular with smaller businesses who may not have much in the way of assets but have a good and regular volume of monthly sales. For businesses who may not have the assets to secure a traditional business loan or have insufficient credit history, a Merchant Cash Advance is a flexible alternative finance option. What businesses can benefit from a Merchant Cash Advance?Īny business that uses a credit/debit card terminal for their sales could, in theory, apply for a Merchant Cash Advance. It’s typically short term (2 years or less) where repayments are taken as a percentage of revenue. It provides access to cash for businesses in return for a proportion of credit card and/or debit card sales. A Merchant Cash Advance is a type of business loan that is becoming popular with SMEs. ![]()
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