A merchant cash advance, without the small print problem

What a factor rate is, and why it is not an APR

A factor rate is the multiplier the lender applies to the advance to fix the total you repay. Published UK factor rates run from about 1.08 to 1.50, and established businesses with steady takings sit nearer the bottom of that span. On a £10,000 advance, a rate of 1.15 means £11,500 back, a cost of £1,500 or 15% of the sum advanced. At 1.35 the same £10,000 costs £3,500, which is 35%.

The difference from an APR is time. An APR describes a cost per year, so a loan repaid early costs less in interest. A factor rate has no clock in it. The £3,500 is £3,500 whether the balance clears in five months or in fourteen, which cuts both ways: a slow year adds no interest, and a fast one earns no discount unless the lender has put an early-settlement reduction in writing.

One honest limitation before you compare quotes. None of the main UK providers publishes a rate card, so nobody can price your advance until the card sales data has been read, and any site that quotes you a factor rate before seeing your statements is quoting the market rather than your deal. Our factor rate explainer turns a factor rate into an annual equivalent for a given term.

What an advance does well, and what to weigh up

The case for an advance rests on how it is underwritten. The lender reads the last three to six months of card takings, not a business plan, so a decision usually arrives within 24 hours and the money within 1 to 2 working days of approval. A patchy personal credit file matters less than it would at a bank, and some lenders will look at a business that has been taking cards for as little as three months, where most banks want 12 months of accounts or more.

No property is taken as security. Every lender on our panel asks for a personal guarantee, which makes you liable for the balance if the business cannot pay, but your home is not charged. Repayments move with trade: a quiet week costs less, a busy one clears more, and the percentage never changes. Because the deduction is automatic, there is no monthly payment to miss.

Against that, the total cost is usually higher than a term loan with an APR, and the gap widens if the alternative is a low-rate loan the business could comfortably service. The size of the advance is capped by the till, typically at 100% to 200% of monthly card turnover, so a business wanting materially more than that will not get it from one advance. And the daily deduction changes how cash flow feels, even though it falls when sales do: on a £1,000 day at 10%, £900 lands rather than £1,000.

Our view, for what it is worth: an advance earns its cost when the money is needed in days and the use pays back inside a year. It does not earn it as a way of carrying a business that is losing money, and we say so when we see it. Stacking a second advance on top of a first is its own problem, covered on our stacked cash advances page.

Merchant cash advance against a term business loan

Set out side by side, the two products differ on speed, on the shape of the repayment, on what the lender reads and on how the cost is expressed.

The longer comparison, with the situations where each one has won on our desk, is on merchant cash advance vs business loan.

What the main UK providers publish

The market is narrower than the advertising suggests, and the three names most UK businesses meet publish quite different numbers. 365 Finance advances £10K to £500K, taking 5% to 15% of card sales. YouLend publishes a ceiling of £2,000,000, no minimum, and no percentage range at all. Capify has moved off advances almost entirely: its direct product is now a fixed-repayment loan of £10K to £3M over three to twenty-four months, and the cash advance survives only on its broker page. Ranges read on the providers' own sites on 7 September 2026.

Eligibility is published too, and it is where most enquiries actually end. 365 Finance asks for six months of trading and £10,000 a month through the card machine. Capify sets its bar at twelve months of trading with £10,000 a month of turnover. Read across those and the pattern is plain: the till record, not the balance sheet, is the qualifying document. Both thresholds were read on the providers' own sites on 7 September 2026, and each provider sets its own criteria, which change.

When an advance does not fit, the usual alternative is a term facility. 55 lenders on our panel write unsecured business loans, 21 of them will look at a business under a year old, and 24 accept minor adverse credit that is more than two years old. Panel checked September 2026; composition changes.

Who it suits, and what to look at instead

The businesses that get the most from an advance take most of their money by card and need the funds inside a week: pubs, cafes, restaurants, shops, salons, online stores, tradespeople with a card reader in the van, and dental or physio practices. The common thread is a till that has been running for at least three to six months and a use for the money that pays back within the year, a kitchen refurbishment or a stock buy ahead of the season rather than a long-term project.

Where the fit is wrong, one of four other products usually fills the gap. An unsecured business loan costs less over 1 to 5 years but wants stronger credit and trading history and takes longer to approve. Invoice finance releases cash from unpaid invoices and suits a business that sells to other businesses on 30 to 90-day terms, which a card-based retailer does not. Asset finance spreads the cost of a vehicle, a machine or a fit-out over its working life, secured on the kit itself. And revenue-based finance is the close cousin: repayments come off total revenue rather than card sales alone, which matters when cards are only part of the picture.

We arrange rather than advise, so we will not tell you which of those to pick. What we will do is put the same enquiry to more than one type of lender where the fit is unclear, and show you the terms side by side.