How does a merchant cash advance work for businesses?

For most UK businesses to operate effectively, cash flow is critical. If you don't have adequate cash flow, your business operation and day-to-day operations are likely to suffer. This is clearly something that business owners will want to avoid.

Naturally, a bank overdraft is likely to be the most widely used means of providing money for everyday business activities. However, for businesses that cannot meet the demands of their bank, a business cash advance can be a viable solution. Many businesses that do not qualify for secured or unsecured bank loans can greatly benefit from this loan method.

A merchant cash advance is a loan made to the business secured against your credit or debit card payments. A business company will advance a loan to a business to use for just about anything it wants. To repay the loan, the business agrees to give an agreed percentage of your credit or debit card payments to the merchant's cash advance company until the full amount has been settled. These payments are made directly to the trading company.

When processing a cash advance from a merchant, there is no requirement to provide additional security IE property or tangible assets, which means the process can be completed much faster than a more traditional mortgage or backed financial agreement. by assets. All security is on future card receipts from the retailer. For this reason the loans are suitable for Hotels, Shops, Garages, Salons, Restaurants, Florists, in fact almost any business that processes card payments.

To qualify for a merchant cash advance, a business must have been in business for at least 12 months. The company must also show a minimum level of billing on credit or debit cards. Once verified and once the business has completed and passed the credit checks, the loan will be processed and the value of the advance will be Merchant cash advance.

Credit history is considered, but it is not the only way to decide if the loan will be granted; affordability is likely more important. The company will be asked to provide business bank statements and will need to demonstrate a stable proposition. A business can apply for a loan of up to £ 150k with few restrictions on what it can be used for.

So if your business accepts credit cards and has been in business for a year or more, you likely qualify for a merchant cash advance. The merchant will acquire your future credit and debit card receipts and you can receive a cash injection into your business in a few days. Your refunds are taken as a percentage of the amount of business you process on your card transactions. Simply put, the lender is paid when your business is paid.