While a Merchant Cash Advance (MCA) is a form of borrowing, it’s distinct from traditional business loans in several key aspects.

Firstly, an MCA is unsecured, meaning it doesn’t require collateral or personal assets as security. Eligibility and the advance amount are primarily based on your business’s credit and debit card sales volume.

Secondly, the MCA is inherently flexible. Repayment aligns with your business’s performance; it speeds up when sales are high and slows down during slower periods. Unlike fixed-term loans, the duration to clear an MCA depends on your business’s revenue trends. However, there is a predetermined final repayment date, which could range from a few months to several years.

Thirdly, unlike traditional loans, MCAs don’t typically include penalties for late or early repayments. Since repayments are automatically deducted from card sales, late fees are not applicable. Similarly, if your business experiences rapid growth and you repay early, there are no additional charges. This feature makes MCAs particularly adaptable to the fluctuating financial landscapes of businesses.

MCAs provide funds upfront, repaid by deducting a percentage from daily or weekly card sales or through fixed bank account withdrawals. The repayment period typically ranges from 3 to 18 months.

Yes, MCA lenders consider different factors than traditional banks, focusing on a merchant’s payment processing history rather than traditional credit measures​.

MCA providers don’t emphasize traditional credit scores as much, so having no credit or even bad credit won’t necessarily disqualify you if you have consistent cash flow.

It depends on the integration between the MCA lender and your payment processor. If the current processor cannot integrate with the MCA lender, a change may be required​.

Yes, if a business is struggling with MCA repayments, refinancing is an option. This involves obtaining a new loan with potentially lower interest rates or more manageable payment amounts​

Terms include the principal amount to be repaid, a factor rate that determines the total payback, and a percentage deduction of credit card sales. The repayment is made through a percentage of daily or weekly card sales

MCAs are well-suited for businesses with heavy card machine usage, such as retail, hospitality, or tradesmen carrying handheld machines.

Typically, there are no strict restrictions on the use of MCA funds. Businesses can use them for a range of purposes, including equipment purchases, marketing, or covering operational expenses.

A Merchant Cash Advance is available to any business that accepts credit or debit card payments, including: beauty, hotels, restuarants, takeaways, pubs, bars and garages.

The BMCAA is dedicated to ensuring British businesses have information and access to capital via the Merchant Cash Advance sector, which in turn will help to grow and strengthen the UK economy.

Unlike business loans, MCAs are repaid based on a percentage of daily card sales and do not have fixed monthly repayments. They are generally more accessible to businesses with lower credit scores or shorter operating histories.