What is a Business Cash Advance?

With a Business Cash Advance, (also known as a Merchant Cash Advance) the lender will advance your business an amount equivalent to around two months’ card takings for any business purpose.

That capital, plus a one-off fee agreed at the start (anything from 3% up to 30% dependant on circumstances), forms the repayable balance you owe back to them. Repayments are taken via the lender being sent an agreed % deduction of your daily card sales, as and when you make sales, until that balance is repaid.

This is a great funding solution for businesses operating in the retail sector such as pubs, salons, florists etc. The funds can be used for any purpose, whether it be to repay a Tax Bill, carry out Refurbishment works, or fund stock/equipment purchases.

To be eligible, businesses need to have been trading for 3 months or more and take at least £5k of card payments per month. Borrowers don’t necessarily have to be homeowners (which some lenders insist on) but they will need to provide a Personal Guarantee to support the loan.

This type of facility may not be the most cost-effective way of funding your business but may allow you to seize opportunities that might not otherwise be available to you. We would always recommend looking at all options of funding to see which works best for you and your business.

If you would like to find out more about how a Business Cash Advance could help your business, please get in touch.

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