Merchant financing provides businesses with capital based on daily sales or revenue, including options like merchant cash advances (MCAs) or point-of-sale (POS) financing. Repayments are tied to the business’s revenue, offering flexibility for those with variable income to manage cash flow and operational expenses.
Applying for merchant financing involves a simple process. First, assess your eligibility based on factors like revenue, sales volume, and business history. Then, submit an application with your business details and financial statements. Once approved, you’ll receive an offer with loan details and repayment terms tied to a percentage of your sales. After agreeing to the terms, funds are disbursed quickly, ready for use in working capital, inventory, or operational expenses.
In this scenario, the lender provides £10,000 upfront, to be repaid with £12,500 of future sales. Repayments are set at 20% of daily or weekly sales. Unlike traditional loans, this isn’t interest, but a portion of sales allocated for repayment. Higher sales result in larger repayments, while lower sales reduce the amount, offering flexible terms based on business performance.
In this example, each sale contributes to repaying the £12,500 owed, with higher sales leading to faster repayment. The key difference is that repayments are proportional to sales—higher sales mean higher repayments, while slower sales reduce them. Unlike traditional loans with fixed monthly payments, cash advances adjust based on your revenue, offering flexibility and reducing financial pressure during slower periods.
When applying for a merchant cash advance, lenders assess your monthly turnover to set repayment terms. Typically, you need to be a UK-based business with card payment processing and at least six months of trading. Each lender offers varying terms, including repayment durations, fees, and conditions. The process is quick, simple, and doesn’t affect your credit score. To get started, provide details on the amount needed, its purpose, and basic business info. Financing solutions help you find the best option for your needs.
