Merchant cash advance is a loan provided to the business secured against its credit or debit card payments

Merchant Cash Advance 

For most businesses in the Uk to run effectively, cash flow is king. If you do not have adequate cash flow, your commercial operation and day to day running is likely to be affected, clearly something business owners will want to avoid.
Naturally the Bank overdraft is likely to be the most commonly used means of providing money for everyday business. However, for companies that cannot meet the demands of their bank, a merchant cash advance may be a viable solution. A lot of businesses that do not qualify for unsecured or secured bank loans may benefit greatly from this method of borrowing.

A merchant cash advance is a loan provided to the business secured against its credit or debit card payments. A merchant company will advance a loan to a business to be used for almost anything they like. To repay the loan, the business commits to give an agreed percentage of its credit or debit card payments to the merchant cash advance company until the whole amount has been cleared. These payments are made directly to the merchant company.

When processing a merchant cash advance there is no requirement to provide additional security IE property or tangible assets which means that the process can be completed a lot quicker than a more traditional mortgage or asset backed finance arrangement. All the security is in the future card receipts of the retailer. For this reason the loans are suitable for Hotels, Shops, Garages, Salons, Restaurants, Florists, in fact almost any business that processes cards payments.
To qualify for a merchant cash advance, a business needs to have been trading for at least 12 months. The business also needs to show a minimum of £3,500 monthly turnover 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 agreed.
Credit history is considered but is not the sole means of deciding whether the loan will be granted, affordability is likely to be more important. The business will be asked to provide business bank statements and need to demonstrate a stable proposition. A business can apply for a loan of up to £150,000 with few restrictions on what it can be used for.
So if your business accepts credit cards and has been trading for a year or more, you are likely to qualify for a merchant cash advance. The merchant will acquire your future credit and/or debit card receipts and you can receive cash injection into your business within days. Your repayments are taken as a percentage of the amount of business you do on your card transactions. Put simply the lender gets paid when your business gets paid!