Representative Example: On an assumed loan amount of £750 over 12 months. Rate of interest 191.2% (fixed). Total repayment amount £1726.68 and total interest is £976.68. 12 monthly payments of £143.89. My Financial Broker is a broker, not a lender*.
* As a broker, we are unable to ascertain exactly how many customers take out a loan or the lender’s rate of interest particular to that customer, therefore our calculation is based on the mean APR of our panel of lenders.
Merchant cash advances are very helpful for shops and businesses, providing money upfront and only taking repayments against future credit card transactions.
Broker services often work with a number of merchant cash advance providers, allowing you to borrow money for your business, repaid over up to 24 months. Most applications are online, and should not take long to complete.
What Are Merchant Cash Advances?
Merchant cash advances are a type of business loan designed to help businesses by providing money upfront and helping merchants stay on top of their cash flow. Merchants such as shopkeepers, as well as bar, hotel and restaurant owners often need to take out payments through credit card machines and card terminals (PDQ).
The delay in getting paid from card transactions creates an unhealthy cash flow, but this is where merchant cash advances come in. You can apply for however much you need to help you stay on top of your cash flow and repayments are only taken when the card transactions are processed.
The fees charged are just a fixed percentage of your card earnings (around 10% to 20% depending on the lender) – so whether your business is busy or experiencing a bit of a lull, you are not stuck paying extraordinarily high interest rates.
You have the flexibility to repay your merchant cash advance when you feel comfortable to do so, with companies paying each month and only tending to use the service for around 6 to 12 months.
Who Uses Merchant Cash Advances?
Companies that use merchant loans include any business that takes a lot of credit card payments through VISA, Mastercard and American Express, including:
- MOT garages
- Hair salons
The nature of credit card terminals is that there can sometimes be a delay of 30 to 90 days in receiving payment, which can add unnecessary stress to a fledgling business. Most businesses will need the money sooner rather than later to pay for staff salaries, rent, equipment and other running costs. However, merchant cash advances can help with this waiting period by offering low cost finance upfront.
How Do Repayments Work For Merchant Cash Advances?
The lender will simply take repayment when your card transactions have been paid. There is no interest rate or APR, it is a fixed percentage of around 10% to 20%, taken each month.
You can discuss the dates of repayment with the lender when you apply for the cash advance, to ensure that they are taken at convenient dates of the month.
What About Online Payment Platforms?
Can you use online payment platforms with merchant cash advances? Yes, merchant loans work exactly the same for eCommerce and online payment gateways, with our lenders able to support Paypal, Stripe, Amazon Pay, SagePay and many other providers.
In this ever changing world of technology, lenders have to ensure that they can cater for as many people as possible. That’s why most loan applications are now made online rather than in person – it’s much more convenient for the majority of people to apply from the comfort of their own homes.
Do I Need to Change My Credit Card Terminal?
No, most lenders won’t require you to change your card terminal. They will understand that in the majority of cases, borrowers need access to cash fast, so won’t have time to change their card terminal before applying for a loan.
When you apply for a merchant cash advance, the process has been created to be as straightforward as possible. It may be a good idea to discuss these details with your lender though, to give yourself peace of mind.
Does it Matter If I Have Bad Credit?
You can rest assured that you can be approved with a bad credit rating. This is because your merchant cash loan is based on your future credit card payments, and not your personal income or affordability.
Payments should be taken automatically through your credit card terminal provider, such as VISA, but if you miss repayments, there could be additional charges and it could affect your credit score.Apply Now