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What Is a Merchant Cash Advance and How Does It Work?

Ever had a busy week of card sales, only to feel like the numbers don’t add up when it comes to the cash in the bank? You’re serving customers and turning over sales, but still hitting a wall when it comes to covering bills or upgrading equipment. 

It’s a familiar scenario for many retailers, hospitality venues, salons, clinics and tradespeople. And traditional lenders aren’t making it any easier. In 2024, fewer than 50% of small businesses in the UK were approved for traditional bank loans, a significant drop from 67% in 2018. 

At the same time, 60% of business lending is now coming from challenger or specialist lenders stepping in to offer faster and more flexible funding options. 

One of the fastest-growing solutions is the Merchant Cash Advance – a funding solution designed to move with your business, not against it. 

What Is a Merchant Cash Advance?

A Merchant Cash Advance (MCA) isn’t like a traditional loan. It’s an advance on your future card takings, giving you an upfront cash injection that you repay through a fixed percentage of your daily card sales. 

That means repayments flex with your income: you pay more on busy days and less when things are quieter. For businesses with seasonal trade or fluctuating footfall, that flexibility can be a real advantage.

How does it work?

The process is quick and straightforward: 

– You share your recent card sales data (usually the last 3-6 months).

– The funder assesses your average monthly takings and approves a lump sum.

– Once approved, the cash is deposited into your account, often within 48 hours.

– A pre-agreed percentage is automatically deducted from your sales until the advance is repaid.

There are no fixed monthly amounts. No collateral. Just a line of funding that rises and falls with your turnover. 

Who is it best for?

MCAs are designed for businesses that take the bulk of their payments by card. They are particularly useful for seasonal businesses that want to avoid fixed repayments during quieter months, or for those who have been declined for a traditional loan but need fast access to funds.

Think: 

– A restaurant or café looking to upgrade kitchen equipment 

– A salon investing in new chairs and fit-out ahead of peak season 

– A retailer increasing stock levels ahead of Christmas

– A trade service bridging cash flow while waiting on invoices.

If your sales are steady, an MCA can help cover short-term gaps or free up capital for growth, without locking you into rigid monthly repayments. 

Pros and cons of merchant cash advances

Benefits:
MCAs offer flexible repayments that scale with your sales, meaning you do not have to worry about missing a fixed payment during a slow week. They require no collateral and can be approved quickly, often with funds in your account within two days.

Things to weigh up:
They can be more expensive than traditional loans because they use a factor rate model instead of interest. Daily repayments also mean a portion of your takings is reduced until the advance is repaid, so they may not suit businesses with low or unpredictable card sales.

Making the right choice

A Merchant Cash Advance can be a lifeline if you need quick, flexible funding and your business consistently takes card payments. However, it is important to weigh the cost against the benefits and compare it with other funding options. But like any financial product, it pays to compare the cost and structure against alternatives.

Working with a finance partner who understands both your business and the wider lending market means you can get tailored advice on whether an MCA is right for you. Access to multiple providers and a range of repayment terms also increases your chances of securing the most suitable deal.

If you think a Merchant Cash Advance could help you free up working capital, speak to our experts at Jones & Co to explore your eligibility.

How Jones & Co can help

At Jones & Co, we understand that every business is unique, and so are its financial needs.

That’s why we craft tailored finance solutions that enable businesses to thrive, no matter the challenge or opportunity.

With access to a vast network of trusted lenders, we’re here to simplify the process, offering straightforward, personalised guidance designed around you and your goals. Whether you’re looking to manage cash flow, invest in growth, or expand operations, our experts are ready to connect you with the ideal funding solution.

Contact our expert team today for a free, no-obligation consultation and take the first step toward business growth. 

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