Merchant cash advance: PDQ funding from your card machine

For businesses that don't have access to assets or capital, growth can be a challenge. Raising finance generally means turning to a lender who expects you to offer assets from your company or personal life as security. If you need capital and don't have those assets, you can be stuck in a challenging cycle. 

Merchant cash advances give businesses a new pathway to raising the cash they need. Functioning as a type of card machine loan, a lender issues you with a cash advance and then repayments are spread out and made as a percentage of your card transactions. 

If your business takes plenty of card transactions, a merchant cash advance may be the ideal way to finance your growth. Read on to learn more about how it works, or contact Rangewell now to see how we can help you identify a lender who can support your goals and negotiate a better deal. 

What is a merchant cash advance?

A Merchant Cash Advance - also known as a Business Cash Advance - can provide a simple way to deal with short-term and seasonal cash issues – or to fund your business growth plans.

A merchant cash advance is a type of lending that is designed to help businesses flexibly gain access to cash. The lender will provide the company with a cash advance, and the business will then pay it back through a percentage of its customer's card payments used by the card terminal.

Merchant cash advances are the ideal solution for many businesses that use car terminals. It can be easier to access this than other forms of finance. This is the ideal solution for those who have no or very little assets or need capital but have a limited credit score. 

Merchant Cash Advance, or Business Cash Advance (MCA/BCA), can provide cash advances that are typically equivalent to your monthly takings.

The advance is then paid back automatically as your customers make card payments. With many conventional lenders still reluctant to lend, it can provide a simple way for businesses, and especially those in the retail sector, to raise the funds they need.

How does merchant cash advance work?

A business will borrow a lump sum from a lender, and then they'll pay it back through card payments. Just like other types of finance, you can use the loan in any way to grow your business. 

The lender will work directly with the card terminal provider, so they'll see how much money is going through the business. Unlike other types of lending, there's no need for credit checks.

A merchant cash advance will adapt to your business and how much money it makes. This will give you much more confidence in knowing if you can make the repayments. How much you'll be able to borrow will depend on things like annual turnover and how much you can repay in the lender's eyes. 

Here at Rangewell, we work with many merchant cash lenders and help source the right deal for your business needs. So speak to our team today to start your merchant cash advance application to improve your future sales.

How much can you borrow?

With a merchant cash advance loan, the loan amounts can be as much as 100% of your average monthly card transactions between £5,000 and £50,000. So if you earn £7,000 per month from your PDQ machine, you'd qualify for a merchant cash advance of £7,000.

Most lenders will advance a maximum of one month's takings. They may look at an average of 3 months' trading to get a representative figure.

What are the advantages?

The main advantage of cash merchant advances is that it provides a lump sum with no restrictions, so you can use it however you want to help your business develop and grow. In addition, it's easier for small businesses to get finance as there is no need for credit checks, and there is minimal paperwork - money can be accessed quickly!

An MCA or BCA can bring you the funds you need fast, often in just days. Then it makes repayment automatically, with a set percentage of every credit card payment you take going straight to the lender.

It means your customers repay your cash advance for you.

What are the disadvantages?

A merchant cash advance can be risky, especially for small businesses. It takes a chunk of the cash that comes in, even when the sales are lower than usual, potentially putting a business under strain until the advance is paid off. The factor rate for an MCA is fixed and is applied to the entire cash advance upfront.

Merchant cash advance lenders & criteria

To get a merchant cash advance, you'll need to be a business that uses a card machine to take payments. Most lenders expect a certain volume of transactions and gate different rates behind different volumes. The best rates are typically reserved for businesses that have the highest volume of transactions - though you may be able to access them if you have a team like Rangewell on your side. 

Not all lenders offer merchant cash advances, but the market is still well served by specialists and mainstream brands alike. The biggest challenge for a business looking to raise a cash advance loan using their card machine is to find a lender that understands their business model and sector and can offer repayment terms that don't hamstring your future growth. 

Rather than having to go it alone, speak to Rangewell. We'll work on your behalf to find lenders that can support you and then arrange finance that works for your business model and card transaction volume. We

What can merchant cash advance be used for?

As a lender can quickly see what a business makes over a month, they can agree on a loan amount and a repayment plan much faster than another form of lending. So it can be a great solution to businesses who need cash fast. 

Training and recruiting new staff

It's common knowledge that attracting and retaining employees is the key to the success of any ongoing business. In addition, this type of lending can free up the cash so that you can invest in their developments.

Purchasing stock 

You can use the money from your lenders to purchase the inventory you need for your business to operate. At Rangewell, we can also offer inventory loans. This means that you'll repay what's borrowed over time and will usually pay it back with interest.

Purchasing new equipment

Equipment financing will provide your business with the funds to purchase or lease equipment you need in order to grow and operate. An equipment loan can help improve cash flow and will meet ongoing business expenses. 

To find out more about repayments based on your monthly card takings, speak to Rangewell today. We can arrange a financial product to suit your needs, and we'll let you know about your loan approval rate chances.

Helping with your cash flow

Cash flow-based loans are a good way for businesses to manage credit costs efficiently. Asset-based loans are an alternative to merchant cash advance loans because this is a secured loan, it will have better credit terms.

Rangewell can offer you more flexible deals in comparison to a traditional bank loan or a traditional business loan. We can discuss your business plan in more detail and help you with your application process.

To find out more about merchant money lending through debit card sales, speak to Rangewell today. 

Can you get a Business Cash Advance?

Technically an MCA/BCA is not a loan because it provides the money as an advance on your projected takings. This may mean that even businesses with an impaired credit rating may be able to use them to raise the cash they need.

It is also very simple to arrange. Because you already have a business arrangement with your card service provider, there should be no need for the usual checks and underwriting that are required if you apply for a loan.

If you use a card terminal, also known as a PDQ - you can apply for PDQ funding. Because the lender can see what the business makes over an average month they can agree on a loan amount and repayment rate fast. You can get cash in days, making it a great option if you don't have assets, or need finance fast.

If you're looking for a business loan to help grow your business, get in touch with our experts today. Our expert brokers can discuss your repayment terms and offer flexible repayments to suit your needs.

We'll discuss debit card payments, and how you can pay back a loan by using your future card transactions. Please be aware that if you make a late payment, your loan terms will change. Speak to your lender for more information 

How Rangewell can help you

There are a growing number of lenders providing Business Cash Advance arrangements. Finding the most competitive deal for your business means finding the right lender.

At Rangewell, we can help. We know the lenders who can offer the most competitive rates for all types of finance - including BCA/MCA. 

To get a better idea of cash advances based on credit card sales, speak to Rangewell today.