365 Business Finance
- Funding in as little as 48 hours with no security or business plan required.
- No fixed term or fixed monthly payments, just one all-inclusive fixed cost.
- Pay back when your customers pay you.
If you own a small business that relies heavily on sales, it can be difficult to borrow money – and you may be unsure of when you’ll sell enough to be able to pay it back.
If a decent portion of your sales goes through card payment, you may want to take a look at how business and merchant cash advances work.
A business cash advance is a form of unsecured business credit. You get a lump sum upfront from a lender, and you pay it back as a percentage of your business’s card sales.
Business cash advances don’t have a fixed term or interest rate. Instead, you’re charged a flat fee that’s agreed upon at the outset. You’ll know in advance exactly what the loan is going to cost you overall. By contrast, the repayment term is very flexible – and depends on how much money your business makes in sales.
This is the primary benefit of a business cash advance – if the going’s good, you clear your debt faster, and if things are slow, your contributions towards clearing the debt reduce proportionally. Either way, the overall cost remains the same.
With a merchant cash advance, the repayments are taken directly from your PDQ machine (credit card terminal) as a percentage of transactions, so you don’t have to do anything else – the money doesn’t even reach your account, it goes directly back to the lender.
He takes out a merchant cash advance, effectively selling £9,500 of future sales to a lender for £8,000. That’s a fixed fee for the lender of 18.75%.
Despite serving a similar purpose (providing a line of credit for your business), business loans and merchant cash advances work quite differently. With a business loan, you also get a lump sum at the beginning, but you pay it back monthly (for example by direct debit) in a pre-agreed period of time.
Inherent loan features are thus also quite different:
Merchant cash advances can be a bit tricky to compare, because you’ll have to rethink the way you usually look at loans – remember, the amount of time you keep the money for isn’t the main factor anymore. Look at:
If you’ve decided to go for a merchant cash advance, compared providers and checked your eligibility, you’re ready for the actual application. Here’s what you’ll likely need:
If you need finance but also flexibility, you can also consider:
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.