A business cash advance is an unsecured finance solution that allows you to quickly raise capital for your business. There are no fixed monthly payments, APRs, late fees or security needed. Repayments are taken as a small percentage of your future credit and debit card sales, meaning you only pay back when your customers pay you. The processing of repayments happens automatically so there is no disruption to your business.
Unlike a traditional bank loan, there are no interest rates or APRs with a business cash advance. Instead, you pay one, all-inclusive cost that never changes regardless of how long it takes for you to repay. Repayments are taken as a small percentage of your card payments, meaning repayments mirror your cash flow, easing financial stress – when you have a quiet period you simply repay less, and when business picks up, you repay more.
A cash advance is often seen as an alternative to a bank loan. Business cash advance lenders have to meet strict financial terms and conditions to protect borrowers. Many use strict application policies also, to ensure borrowers will not have a detrimental impact on their business through repayments.
Like any loan there are steps to getting a merchant cash advance. Firstly, you’ll need to apply online, submitting information such as your monthly credit/debit card sales and business trading history. An underwriting decision is usually made within 24 hours, dependant on any additional information a business will need to supply. If your business is approved, a one all-inclusive fee will be agreed between the borrower and lender. Once agreements are signed, the funds can usually be in your account within 48 hours.
The advance can be used for many reasons and a lender will talk through business plans and options with any potential borrowers. Popular uses are business expansions, renovations, product development and marketing.
The advance can be used for many reasons and a lender will talk through business plans and options with any potential borrowers. Main reasons for a cash advance include:
• Paying employees, suppliers and other creditors to fuel business operations and avoid cash flow problems.
• Purchasing equipment, vehicles and other items to increase efficiency and develop a stronger, more effective business.
• Expanding by opening up a new location, hiring more staff or launching new products, services and offers.
• Advertising existing products and services to bring in new customers and grow sales revenue.
• Purchasing the lease in order to own the shop location and enhance business services.
Any UK business that processes card payments through a card machine (PDQ) and/or online payment system can be eligible for a business cash advance. Industries that tend to apply for a cash advance include:
• Convenience stores
Applications can be submitted online, although some businesses may need to provide physical documents.
The application process is simple and straightforward – your chosen lender should provide a funding advisor to help guide you throughout the process.