Merchant Cash Advance – what is it and how does it work?

Loans18th February 20190 CommentsLeyton Jeffs


Despite being available for at least the last 8 years in the UK and being a huge market in the US, only a small percentage of UK business owners are aware that they can unlock valuable working capital by borrowing against debit and credit card sales. This innovative product has been helping customers to fulfil their business plans without the need for rigid payments or that dreaded monthly direct debt.

How does merchant cash advance work?

Based on the amount that the business processes in card payments each month, most lenders will look to advance between 75-150% of this amount for reinvestment within the business. This capital is then repaid via a set percentage of the daily business card sales until a fixed total repayable is cleared. Most business owners stop noticing the repayment after a while and continue to top up to help constant improvements.

For example, a business processing an average of £50,000 per month could release between £37,500-£75,000 of working capital, they then agree to (for example) 15% of daily card sales as a repayment until their fixed amount is repaid. The daily percentage is flexible and works with the peaks and troughs of the businesses trade, a quiet day on a Monday for example would mean a lower repayment compared to a busy weekend where more will be repaid.



Do you qualify for a merchant cash advance loan?

If your business takes regular card payments and you have been trading for more than 6 months, then you could be eligible for a merchant cash advance (or MCA finance). The product is very popular in the hospitality market with restaurants, hotels and health & beauty businesses prime examples but realistically any business with a card machine should be considering this avenue of finance.



What can MCA help with?

Popular uses for the product include but are not limited to refurbishment, expansion, paying tax bills or just general assistance with cash flow. Sedulo’s funding experts are available to compare merchant cash advance companies to ensure the most competitive rates and appropriate facilities for your business.

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