Merchant Cash Advance - Business Cash Advance UK - Fleximize

Merchant Cash Advance

What is a merchant cash advance and is it right for your business funding needs?

For many business owners, peaks and troughs in revenue are inevitable. Whether you're a retailer experiencing fluctuations in footfall or a hotel relying on seasonal visitors, managing cash flow can be a challenge.

In addition to traditional business loans, merchant cash advances can help SMEs stabilize their cash flow and provide business owners with the breathing space needed to grow. Read our short guide to merchant cash advances, including how they work, the pros and cons, and other funding solutions available from Fleximize.

What is a merchant cash advance?

A merchant cash advance, or a business cash advance, is a short-term business loan. The lender offers finance to a business in exchange for a small percentage of future card sales, paid back in instalments.

How does a merchant cash advance work?

Generally, the lender will evaluate previous card sales and offer an advance based on the average value of these monthly sales. Then, the business pays the provider a pre-agreed percentage of daily card sales until the full amount is fulfilled (the initial capital plus the fee for using the facility). As lenders work directly with your card terminal provider, these repayments are taken automatically.

How much you pay back in total will depend on fees and repayment percentages. Set up costs and broker fees may also be included, so it's important to bear these in mind when considering a merchant cash advance.

The repayment percentage refers to the agreed amount, or percentage of sales, which you need to repay. For example, if your repayment percentage is 10% and you make £10,000 in card sales in January, you'll pay back £1000 that month (plus fees). This amount will be split into daily payments. If you make £15,000 in card sales in February, you'll pay back £1500 that month (plus fees).

Essentially, the repayment percentage remains constant whilst the actual amount you pay back fluctuates in proportion to your card terminal sales figures.

What are the benefits of a merchant cash advance?

A merchant cash advance can be a great option for SMEs in industries that experience fluctuating incomes, such as cafes, B&Bs, restaurants and retailers. Here's why:

What are the disadvantages of a merchant cash advance?

If you’re considering applying for a merchant cash advance, remember that this form of finance doesn’t necessarily suit all types of businesses and could come with some drawbacks.

Alternatives to a merchant cash advance

Merchant cash advances are just one of many alternatives to traditional bank loans. If you don’t qualify for this form of finance, you could consider applying for other financing options such as Fleximize’s range of flexible business loans.

Our small business loans can be tailored to your needs, and provide much more flexibility than merchant cash advances, with perks such as repayment holidays and top-ups. When repaying a merchant cash advance, your options are quite rigid, with money taken by the provider each day. Our products, however, only require monthly repayments to give borrowers more breathing space. Fleximize's business loans also have no set-up or hidden fees, and there's no charge for early repayments.

Fleximize's business loans are suitable for a vast range of SMEs, including businesses that rely on payments methods other than card. Our lending process takes into account the total revenue of a business, irrespective of whether you make your sales using card, cash, or bank transfer. As businesses can borrow two months' revenue, up to the amount of £500,000, the potential lending amount may be far larger with a Fleximize business loan compared to a merchant cash advance.

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Why choose Fleximize?

Finding the best business loan often comes down to choosing a lender you can trust. That’s why it’s good to know we’re a multi-award-winning digital business lender and have lent over £200 million to thousands of SMEs since launching in 2014.

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Whether you run a high street store or seaside cafe, our business loans will provide your business with the flexibility it needs to prosper. Just see what some of our customers are saying about us: