Merchant Cash Advance
Revenue-Based Business Funding
A merchant cash advance (MCA) is a type of business funding where you receive a lump sum and repay it as a percentage of your daily card sales. CapExpand brokers merchant cash advances from £5,000 to £1,000,000 for UK businesses, with typical factor rates of 1.1 to 1.35. Repayments flex automatically - you pay more on busy days and less on quiet days.
Get £3,000 to £1,000,000 based on your card sales. Repay automatically from future transactions.
Credit is checked, but lenders weigh your revenue and card sales more heavily than banks do. Funds typically in 24-48 hours. No fixed monthly payments.
What is a merchant cash advance?
You get a lump sum upfront. You repay it as a small, fixed percentage of your daily card sales. Busy day? You pay a bit more. Quiet day? You pay less. There's one fixed fee agreed before you sign - no interest that compounds, no monthly invoices that ignore your cash flow.
It's not technically a loan - you're selling a portion of your future card sales. That matters because it means faster approval (often 24 hours), lower credit requirements, and repayments that genuinely flex with your business. As one business owner put it: “No surprise charges, and their fees are easy to understand.”
MCA vs Traditional Loan
MCAs are not regulated by the Financial Conduct Authority (FCA) because they're classified as a purchase of future receivables rather than a loan. This means faster approval but fewer consumer protections than traditional lending products.
Best For
- High card sales volume businesses
- Urgent funding requirements
- Poor credit history businesses
- Seasonal businesses with fluctuating revenue
- Retail, hospitality, and e-commerce sectors
Common Uses
- Inventory and stock purchases
- Equipment and machinery upgrades
- Marketing and advertising campaigns
- Emergency repairs and maintenance
- VAT payments and tax obligations
How Merchant Cash Advances Work
Simple, transparent process from application to repayment
Agreement Terms
You agree on the total advance amount, the factor rate (typically 1.1-1.5), and the percentage of daily card sales used for repayment (usually 5-15%). For example: £10,000 advance at 1.2 factor rate means you'll repay £12,000 total, with 10% of each card transaction going toward repayment.
Process Card Sales
You continue taking card payments from customers as normal. Whether it's in-store, online, or via mobile terminals, all transactions count toward your repayment.
Automatic Deductions
The pre-agreed percentage is automatically withheld from each card transaction at the point of sale. This happens smoothly through your payment processor with no extra steps required.
Receive Funds
You receive the remaining amount from your card sales in the same timeframe as usual. The MCA repayment doesn't delay your business receiving funds.
Balance Reduction
Every card payment you process reduces the outstanding MCA balance. Busy days mean faster repayment, quiet days mean less pressure on cash flow.
Completion
Once the full amount (advance + fee) is repaid through your card transactions, the deductions stop automatically. You can then apply for a new advance if needed.
Example Scenario
With 10% repayment rate: If you process £1,000 in card sales today, £100 goes to repayment and you receive £900.
Understanding MCA Costs
Transparent pricing with no hidden fees
What is a Factor Rate?
A factor rate is a decimal multiplier (typically 1.1 to 1.5) used to calculate your total repayment amount. Unlike APR or interest rates, factor rates have no relationship to time-the cost is fixed regardless of how quickly you repay.
Factor Rate 1.15
£10,000 advance → £11,500 repayment
£1,500 total cost (15%)
Factor Rate 1.35
£10,000 advance → £13,500 repayment
£3,500 total cost (35%)
Factor Rate vs APR: Key Differences
| Aspect | Factor Rate (MCA) | APR (Traditional Loan) |
|---|---|---|
| Total Cost | Fixed from day one | Varies with repayment time |
| Early Repayment | No savings (cost is fixed) | Can save on interest |
| Calculation | Simple multiplication | Complex percentage calculation |
| Best For | Short-term (3-12 months) | Medium-long term (1-5 years) |
Important Cost Consideration
While MCAs typically have higher costs than traditional loans, they offer unmatched flexibility and speed. The total cost is predetermined, providing certainty for cash flow planning. There are no hidden fees, late payment charges, or penalties for slow repayment periods.
Advantages of Merchant Cash Advances
Why UK businesses choose MCAs for rapid growth funding
Strong Approval Rates
MCAs typically have strong approval rates for card-accepting businesses, as decisions are based primarily on card sales rather than credit history.
Lightning-Fast Funding
Apply online in minutes. Get a decision within 24 hours. Receive funds in your account within 1-2 business days of approval.
No Asset Security Required
MCAs don't require asset security such as property. Personal guarantees are not typically required for MCAs, though terms vary by lender.
Simplified Application
No lengthy business plans needed. Approval based on card sales data via bank statements or open banking integration.
Trading History Matters More
Lenders focus on your recent card sales performance rather than credit history alone. Trading history matters more than credit score for most MCA providers.
Flexible Repayments
Payments automatically adjust with sales volume. Slow month? Pay less. Busy month? Pay more. Perfect for seasonal businesses.
No Credit Impact
MCAs don't affect your credit rating. Repayments are automatic, reducing risk of missed payments and credit damage.
Transparent Costs
Total repayment amount is fixed from day one. No hidden fees, no late charges, no surprises.
Access for Startups
Businesses with as little as 3 months trading history can qualify, compared to 12+ months for most bank loans.
Potential Drawbacks to Consider
Higher Overall Cost
Factor rates typically result in higher total costs compared to traditional business loans with lower APRs, especially for longer repayment periods.
Funding Limited by Sales
Maximum advance is typically capped at 200% of monthly card turnover. Businesses needing significantly more may need alternative financing.
No Early Repayment Savings
Since the total cost is fixed via factor rate, paying off the advance early doesn't reduce the amount owed like it would with a traditional loan.
Cash Flow Impact
Daily deductions from card sales can impact cash flow, especially if your sales volume drops unexpectedly.
MCA vs Traditional Business Loan
Quick comparison to help you choose the right funding
| Feature | Merchant Cash Advance | Traditional Business Loan |
|---|---|---|
| Approval Time | 1-24 hours | 1-4 weeks |
| Funding Speed | 24-48 hours after approval | 1-3 weeks after approval |
| Approval Rate | Typically higher | Varies by bank |
| Typical Term | 3-18 months | 1-5 years |
| Repayment Structure | % of daily card sales (flexible) | Fixed monthly payments |
| Cost Structure | Factor rate (1.1-1.5x) | APR + interest |
| Asset Security | Usually no | Often yes (secured loans) |
| Personal Guarantee | Yes (not asset-based) | Usually yes |
| Credit Check Impact | Minimal/None | Can affect credit score |
| Application Complexity | Simple (3-10 mins) | Complex (business plans, financials) |
| Best For | Short-term, urgent needs | Long-term, planned investments |
Leading UK MCA Providers
Compare direct lenders offering merchant cash advances to UK businesses
YouLend
KEY FEATURES
- Often the cheapest
- 4.8★ Trustpilot
- All business types
- Revenue-based
Liberis
KEY FEATURES
- 300+ partnerships
- 4.9★ Trustpilot
- 89% renewal rate
- Klarna integration
365 Finance
KEY FEATURES
- Revenue-based decisions
- 24hr funding
- Dedicated manager
- Award-winning
Capify
KEY FEATURES
- Established 2008
- 4.6★ Trustpilot
- 1-min eligibility
- Renewal options
Nucleus
KEY FEATURES
- 95% instant decisions
- 4.7★ Trustpilot
- 24hr funding
- Founded 2011
Love Finance
KEY FEATURES
- 4.9★ Trustpilot
- Same-day funding
- 1% monthly rates
- Birmingham-based
Compare Offers from Multiple Providers
Get personalized quotes from top UK MCA lenders. Compare factor rates, terms, and funding amounts in one place.
Compare MCA ProvidersEligibility & Application Process
Who qualifies and how to apply
Typical Requirements
- Monthly Card SalesMinimum £1,000-£10,000 depending on provider (typically £2-5K)
- Trading HistoryAt least 3-12 months of trading (most accept 3-6 months)
- Business TypeLtd Company or LLP (sole traders and partnerships coming soon)
- UK BasedBusiness registered in UK with UK director
- Regular Transactions10+ card transactions per month minimum
Documents Needed
- Business Bank Statements3-12 months showing card sales (or open banking connection)
- Company DetailsCompany name, number, registered address
- Director InformationName, DOB, address, % ownership for each director
- IdentificationPhoto ID and proof of address (passport/driving license)
- Website (Optional)Some providers request business website URL
Application Process Timeline
Frequently Asked Questions
Everything you need to know about merchant cash advances
Do I need a card machine to get a merchant cash advance?
Most providers require you to process card payments, either through a physical card terminal or online. Some providers like YouLend also offer advances based on e-commerce platforms like Shopify, not just traditional card machines.
How quickly can I receive the funds?
Speed varies by provider, but most decisions are made within 1-24 hours of application. Once approved, funds typically arrive in your account within 24-48 hours. The entire process from application to funding usually takes 1-3 business days.
Can I get an MCA with bad credit?
Yes! MCAs are popular among businesses with poor credit ratings. Lenders focus primarily on your recent card sales performance rather than credit history. Many businesses that are declined by traditional banks successfully obtain MCAs.
Is a credit check required?
Most MCA providers do not perform hard credit checks, as their due diligence is based on card sales data. However, some may conduct a soft check. Always confirm with the provider before applying if you're concerned about credit checks.
Can I repay the advance early?
Repayment typically occurs automatically according to the agreed percentage of card sales. Some providers allow voluntary early repayment, potentially with a discount. However, without a discount, there's little financial benefit to early repayment since the total cost is fixed by the factor rate.
Will an MCA affect my credit score?
MCAs typically operate outside the credit reporting system and do not impact your credit score. However, defaulting on repayment and subsequent legal action could affect your credit. Because repayments are automatic, there's reduced risk of missed payments.
What if I need additional funding later?
Many providers offer "top-ups" once you've repaid a significant portion (typically 50-70%) of your original advance. You can also apply for a new advance once the previous one is fully repaid. According to YouLend, over 85% of their customers request additional advances.
Can I keep my existing card machine provider?
In most cases, yes. Most lenders work with your current payment processor setup. However, some may require you to switch to their preferred partner. This should be clarified during the application process.
Are personal guarantees required?
Yes, most MCA providers require a personal guarantee. This means you are personally liable for the outstanding amount if the business cannot repay. While no property is typically taken as collateral, a personal guarantee is a serious financial commitment. Your account manager will explain the specific terms before you proceed with any offer.
What business types qualify?
Sole traders, limited companies, partnerships, and LLPs all qualify. Common industries include retail, hospitality, e-commerce, salons, tradespeople, and healthcare. High-risk sectors may face additional scrutiny or exclusion.
How is the factor rate determined?
Factor rates are calculated based on multiple factors: loan amount needed, trading history length, average monthly card sales, sales fluctuation patterns, and perceived default risk. Rates typically range from 1.1 to 1.5.
Can I use MCA funds for any business purpose?
Yes, MCAs are generally unrestricted use funding. Common purposes include inventory, equipment, marketing, renovations, staff costs, and cash flow relief. However, high-risk uses or sectors may be excluded by specific providers.
Alternative Business Finance Options
MCAs aren't the only option. Explore alternatives that might suit your needs
Unsecured Business Loans
Traditional loans without collateral. Lower costs but slower approval and stricter requirements.
Secured Business Loans
Loans backed by assets offering lower rates. Requires collateral and longer approval times.
Invoice Finance
Access cash tied up in unpaid invoices. Good for B2B businesses with 30-90 day payment terms.
Asset Finance
Spread equipment costs over time. Perfect for vehicles, machinery, and technology purchases.
Business Credit Cards
Revolving credit with rewards. Best for ongoing expenses and 0% purchase periods.
Revenue-Based Finance
Similar to MCAs but based on total revenue, not just card sales. Broader repayment sources.
“What sold me was that they actually listened. I explained our seasonal cash flow challenge and they found us a merchant cash advance where repayments adjust with our takings. It's working well for our business.”
Kelly D. · Weddings & Events · Mansfield · Funded via MCA
Check what you could access
2 minutes. No hard credit check. Your account manager reviews your details and calls you back.
No obligation · Revenue-based decisions · Funds typically in 24-48 hours
Speak to a funding specialist • Mon-Fri 9am-6pm • UK-based team