What Is A Merchant Cash Advance?
A Merchant Cash Advance (MCA) is a flexible funding facility based on your business's future card sales. Instead of borrowing a fixed amount and repaying in monthly instalments, you receive a lump sum upfront and repay it as a small, automatic percentage of your daily card transactions. When business is good, you repay faster. During quieter periods, repayments slow down automatically.
Who Is It For?
MCAs are best suited to businesses that take a significant proportion of their revenue through card payments, such as retailers, restaurants, cafés, bars, hotels, salons and e-commerce businesses. There is no fixed term — the advance is repaid when the agreed total has been collected via card sales.
How Much Can I Access?
Advance amounts typically range from £5,000 to £500,000, based on your average monthly card turnover. Most lenders will advance between 50% and 150% of your average monthly card revenue.
How Does Repayment Work?
- A fixed percentage — typically 5–20% of daily card receipts — is collected automatically
- No fixed monthly payment and no set end date
- The advance is fully repaid once the agreed total (advance + factor cost) has been collected
- There are no penalties for early repayment
What Does It Cost?
MCAs use a factor rate rather than an interest rate. A factor rate of 1.20 on a £50,000 advance means you repay a total of £60,000. Factor rates typically range from 1.10 to 1.50 depending on business performance, sector and card volume. Your broker will present options based on your profile.
What Are The Requirements?
- Minimum 6–12 months trading history
- Regular card sales — typically a minimum of £5,000–£10,000 per month
- A card payment terminal or payment gateway
- UK limited company or sole trader