The merchant cash advance (MCA) usually provides short-term business loans to retailers, paid back over a maximum of 24 months. It involves the MCA provider giving a retailer funds in exchange for a percentage of credit and debit cards sales.
The merchant pays the provider a portion of daily card sales every day until the full amount is fulfilled (the initial capital plus the fee for using the facility). It’s useful for businesses with dips in income, like cafes, B&Bs and retailers, which need money to keep things ticking over in slower times.
The MCA may be helpful for SMEs with fluctuating income, but it can be problematic for businesses that take sales by other means, not just by card. So if you invoice customers or prefer to repay once a month so it's easier to keep track of total repayments to date, the MCA may not be the best option. But there’s another flexible funding option.
Rivalling the Merchant Cash Advance
An alternative to the MCA is Fleximize’s very own pioneering Revenue Advance. Also known as revenue-based finance, this type of small business funding calculates the size of the loan and repayment terms based on all sales – it’s not limited to card payments. This increases the potential lending amount and funding options available to your business.
The Revenue Advance has other advantages for business owners:
- Borrowing money using an MCA can be costly with set-up fees, inflated costs of borrowing and early repayment charges. Fleximize’s Revenue Advance has no set-up fees, and there’s no charge for early repayments and there's the option of top-ups and repayment holidays throughout the term of the loan.
- When repaying an MCA, your options are quite inflexible, with money taken by the provider each day. The Revenue Advance, however, only requires monthly repayments, giving borrowers more breathing space.
Flexibility of revenue-based finance
The Revenue Advance lets merchants repay only what they can afford. If your monthly income goes down, so do your loan repayments. If it rises, your repayment also increases. You repay money each month until you’ve paid off the agreed amount, plus the interest.
For example, if you borrow £25,000, your monthly turnover determines the loan term and payments will align to an agreed percentage of your monthly sales. If your turnover is £50,000 for one month and you have agreed to repay 10% of your monthly sales each month, you would pay £5,000. If it goes down to £45,000, you pay £4,500. This continues until the agreed amount is repaid.
Businesses can borrow up to £500,000, as long as you’re a limited company or LLP. Sole traders can apply for funding from £25,000.
As with all Fleximize loans, the application is quick and easy – money could be in your account within 48 hours. Also, we may be an online lender, but we never use a ‘computer-says-no' algorithm. Instead important decisions are made by your dedicated relationship manager.
Apply for the Revenue Advance today
Call Fleximize on 0207 100 0110 todaty and you could have the funding you need in as little as one to two working days.
Or click on the below Apply Now button to take advantage of Fleximize's quick and easy online application process.