Merchant Cash Advance UK Guide – Compare Merchant Cash Advance Lenders

  • Merchant cash advances are designed for businesses that need an advance on their projected card sales
  • Below we compare a selection of specialist business finance providers that offer merchant cash advances to UK companies
  • Compare amounts and terms available and apply direct today

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Information written by Connor Campbell Last updated on 04 July 2022.

Whether it is to take advantage of an opportunity, as short-term cover for a cash flow problem, or to grow and expand your organisation, at some point you may look to borrow money for your business.

If you regularly receive payments from your customers via debit or credit card, one way to secure funds is through a merchant cash advance. You will be able to borrow a lump sum, and then pay it back through a pre-agreed percentage of your future card transactions.

Our table below allows you to compare merchant cash advance lenders in the UK, including the minimum required turnover a year, the available terms, and how much you can potentially borrow.

Or, if you want a bit more information on how a merchant cash advance works, you can read our handy guide, or take a look at our Frequently Asked Questions.

What is a merchant cash advance and how does it work?

A merchant cash advance is, essentially, a type of unsecured business loan. As with a traditional business loan, you borrow money from a provider and then pay that sum back.

However, a merchant cash advance is specifically for businesses with a high volume of customer debit and credit card transactions. You borrow a lump sum and then, instead of making a fixed monthly repayment, pay off the merchant cash advance through a pre-agreed percentage of your future customer card payments.

This means that your repayment plan is flexible and can accommodate the ebbs and flows of your trading. If you have a busy period, you will pay off your merchant cash advance loan more quickly. If trading is slow, however, you will repay less – you won’t need to find money that you don’t necessarily have to pay off a fixed amount.

What is a factor rate?

Instead of an interest rate that you would typically get on a traditional business loan, merchant cash advances are charged at a fixed rate of pennies per pound borrowed. This is called the factor rate and is mostly displayed as a decimal figure, such as 1.2 or 1.4.

To work out how much you will need to repay overall, the lender will multiply the amount you are borrowing by the factor rate. So if you took out a merchant cash advance of £10,000 at a factor rate of 1.4, you would pay £4,000 in fees on top of the sum borrowed, making a total of £14,000.

The factor rate will be determined by your lender, based on your business sector, and your business’s health and performance.

What can a merchant cash advance loan be used for?

While there are requirements for who can get a merchant cash advance, there are no real restrictions on what the loan can be used for. So you could use your merchant cash advance loan to:

  • cover a cash flow shortage due to seasonal training
  • hire or train staff
  • buy stock
  • purchase new equipment
  • expand your business premises
  • spend money on marketing and advertising

Am I eligible for a merchant cash advance?

To be eligible for a merchant cash advance loan, your business will need to meet the lender’s criteria. This will likely include, but is not limited to:

  • being based in the UK or Ireland
  • having a merchant account (i.e. accepting debit and credit card payments)
  • being a limited company, partnership or sole trader
  • trading for a minimum period (this can vary from lender to lender)
  • processing a minimum amount in card sales per month (this can vary from lender to lender)

Since a merchant cash advance is based on monthly card sales, it is possible to get one if you have a bad credit history. However, your credit score may affect your factor rate if the lender perceives you as a higher-risk customer.

As a start up, you may struggle to meet the minimum monthly card sales and trading period requirements, though this is not impossible. You may, therefore, need to consider other forms of finance for start ups.

» COMPARE: Start up loans and finance

Merchant cash advance loan example

Let’s say you are eligible to borrow £10,000 from a merchant cash advance lender, at a factor rate of 1.2, to be repaid through 10% of each future customer card transaction.

This means the total amount you will need to repay is £12,000, as that is £10,000 times the factor rate of 1.2.

If a customer bought something from you for £100, £10 of it would go to the merchant cash advance lender. That’s because £100 multiplied by 0.10 (i.e. 10%) is £10.

If you had a strong month at the till, and took £15,000 in card payments, you would have repaid £1,500.

But if your business had a slow month, and only took £2,000, you would have only repaid £200.

Advantages of a merchant cash advance

  • Merchant cash advance repayments are based on a percentage of your monthly card sales, and will rise and fall in line with your business’s performance.
  • The factor rate and percentage of monthly card sales taken are both fixed at the start of your agreement.
  • Your repayments will be taken automatically.
  • You don’t need to provide a business plan to get a merchant cash advance.
  • You don’t need to provide collateral, or assets, to receive a merchant cash advance.
  • It is available for businesses with a weaker business credit score.

Disadvantages of a merchant cash advance

  • The total cost of a merchant cash advance can be expensive when compared to other forms of business finance.
  • You will only be able to borrow an amount in line with your monthly card sales.
  • It is only suitable if your business processes the majority of its transactions via debit or credit card.
  • Some lenders will only work with specific card terminal providers.
  • If you are a start up, you may struggle to get a merchant cash advance unless you meet the minimum trading and turnover requirements.

How can I compare merchant cash advance lenders?

If you want to compare merchant cash advance lenders, you can use our NerdWallet table to see what is currently on offer. You should pay attention to the:

  • minimum turnover requirements
  • available term length
  • minimum and maximum amount available
  • minimum amount of time your business needs to have been trading

Once you have selected your merchant cash advance lender, click ‘see deal’ to start your application.

» COMPARE: Merchant cash advances

Merchant Cash Advance FAQs

What is a merchant cash advance used for?

A merchant cash advance can be used for anything you see fit. This might be hiring new staff, training your current staff, purchasing stock or equipment, or expanding your business premises.

What is the difference between a loan and a merchant cash advance?

With a traditional business loan, you would borrow a sum of money, and then repay that money, with interest, by making fixed monthly repayments.

With a merchant cash advance, you still borrow a lump sum of money, but you then repay it not in fixed monthly payments, but through a percentage of your monthly debit and credit card sales. This means your repayments will rise and fall with your card sales.

And instead of an interest rate, a factor rate will determine how much you repay overall. So if you borrow £10,000 with a factor rate of 1.2, you will need to repay £12,000.

» COMPARE: Business loans with NerdWallet

What is a merchant cash advance agreement?

A merchant cash advance agreement is simply the contract between your business and the lender, detailing the terms and conditions of your deal. It will include the amount of money you are borrowing, the factor rate, and the percentage the lender will take of your future monthly card sales.

Are merchant cash advances legal?

Yes, merchant cash advances are legal. They can allow you to fund a range of business activities, and are repaid through a percentage of your future monthly card sales.

About the author:

Connor is a writer and spokesperson for NerdWallet. Previously at Spreadex, his market commentary has been quoted in the likes of the BBC, The Guardian, Evening Standard, Reuters and The Independent. Read more

Merchant Cash Advance UK Guide – Compare Merchant Cash Advance Lenders

4 products found
  • Swoop Funding Merchant Cash Advance logo
    Broker

    Swoop Funding Merchant Cash Advance

    • Access an unsecured advance of cash based on your future credit and debit card sales, not business profits
    • Only available to businesses that take card payments
    • Use for any business purpose
    • Minimum Turnover
      £25,000 p.a.
    • Available Amounts
      £2,500 to £500,000
    • Available Terms
      1 month to 1 year
  • Funding Xchange Merchant Cash Advance logo
    Broker

    Funding Xchange Merchant Cash Advance

    • Discover instant & personalised Cash Advance offers in just 3 minutes
    • A flexible way to raise working capital for your business
    • Repayments are based on your credit & debit card sales
    • Minimum Turnover
      £100,000 p.a.
    • Available Amounts
      £1,000 to £250,000
    • Available Terms
      1 month to 5 years
  • 365 Business Finance Merchant Cash Advance logo

    365 Business Finance Merchant Cash Advance

    • A flexible business funding alternative
    • Pay back an affordable % of your card transactions
    • No security or business plan required
    • Minimum Turnover
      £10,000+ card transactions per month
    • Available Amounts
      £10,000 to £300,000
    • Available Terms
      4 to 18 months
  • iwoca Merchant Revenue Based Loan logo

    iwoca Merchant Revenue Based Loan

    • Get up to £50,000 for your business with a 24 hour decision
    • Tailor your loan how you like it by choosing a percentage of your revenue to repay each month
    • You won’t pay any interest but there is a simple, fixed fee
    • Minimum Turnover
      £12,000 p.a.
    • Available Amounts
      £1,000 to £50,000
    • Available Terms
      1 month to 2 years
  • Suppliers that don't offer Merchant Cash Advances but may offer suitable alternatives:

    • Nationwide Finance Business Finance logo

      Nationwide Finance Business Finance

      • Nationwide Finance help 35,000 businesses get finance each year
      • Direct funder - not a broker
      • Same day decision, funds within 24 hours
      • Minimum Turnover
        No minimum
      • Available Amounts
        £8,000 to £500,000
      • Available Terms
        1 to 5 years
    • Funding Circle logo

      Funding Circle

      • Your business must have a minimum of 2 years’ trading history
      • A leading UK platform for small business loans
      • Simple online application and decisions in as little as 5 hours
      • Rates from 4.9% per year - No early settlement fees
      • Minimum Turnover
        £16,700 p.a.
      • Available Amounts
        £10,000 to £500,000
      • Available Terms
        2 to 6 years
    • Tide logo
      Broker

      Tide

      • Tide works with a number of partners who offer a range of flexible business funding solutions
      • They will run pre-eligibility checks, without affecting your credit score, to show you credit options tailored to your business
      • Connect your business bank account in minutes to see your credit options and receive a £75 Uber/Uber Eats voucher (Terms & Conditions apply)
      • Minimum Turnover
        Varies
      • Available Amounts
        £500 to £15,000,000
      • Available Terms
        1 month to 6 years
    • Cubefunder logo

      Cubefunder

      • Only available to Limited Companies in England and Wales with 3+ months' trading
      • Fast and Flexible funding from £5,000 - £100,000 for Limited Companies within England and Wales
      • No penalties for Late payments or Early repayment
      • Apply and receive funds within 48 hours
      • Minimum Turnover
        £50,000 p.a.
      • Available Amounts
        £5,000 to £100,000
      • Available Terms
        3 months to 1 year
    • Fleximize logo

      Fleximize

      • Industry-leading flexibility - top-ups, repayment holidays, penalty-free early repayment, no set-up fees
      • Interest charged on reducing balance, not total loan amount - repay early and only pay for the time you had the loan
      • Apply online in five minutes, typically get a decision in 24 to 48 hours, receive funds the same day
      • Minimum Turnover
        £60,000 p.a.
      • Available Amounts
        £5,000 to £500,000
      • Available Terms
        3 months to 4 years
    • Capify logo

      Capify

      • Your business must have a minimum of 1 years trading history. No sole traders.
      • Capify loans are paid back in very small automated regular payment; either daily or weekly
      • A fast and easy business funding alternative for SMEs
      • Funds can be used for any business purpose, from managing cashflow through to improving technology
      • Minimum Turnover
        £120,000 p.a.
      • Available Amounts
        £5,000 to £500,000
      • Available Terms
        3 to 18 months
    • Lombard logo

      Lombard

      • Lombard offers a comprehensive range of asset finance solutions - specialising in business car finance
      • A simple finance solution with a credit decision in 24 hours for transactions up to £150,000
      • Security, guarantees or indemnities may be required. Product fees may apply. Finance is subject to status and is only available for business purposes
      • Minimum Turnover
        No minimum
      • Available Amounts
        £5,000 to £250,000
      • Available Terms
        1 to 7 years

Our comparison service features a selection of providers from whom we receive commission. This table is initially ordered according to our commercial arrangements. You can use the options above the table to order it according to various criteria.

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