Merchant Cash Advance

A Merchant Cash Advance (MCA) is a type of business financing that provides a lump sum of cash upfront in exchange for a percentage of your future card sales. It’s not a loan but rather an advance on your projected revenue, making it an excellent option for businesses that rely on credit and debit card transactions. Repayments are tied to your daily card sales, so you pay more when sales are high and less when they’re slower, offering flexibility that adapts to your cash flow.

What is Merchant Cash Advance (MCA)

There are two primary types of MCA:

  1. Split Withhold MCA: A fixed percentage of daily credit or debit card sales is withheld automatically to repay the advance.
  2. Fixed Withhold MCA: A fixed amount is withheld daily or weekly from the business’s bank account, regardless of daily sales volume

Advantages of Merchant Cash Advance (MCA)

  • Flexible Repayments: Repayment amounts adjust based on daily sales, ensuring businesses aren’t overburdened during slower periods.
  • Fast and Accessible Funding: MCAs are easy to qualify for, with minimal paperwork and fast approval, making them ideal for businesses needing quick cash.
  • No Fixed Collateral Requirement: Unlike traditional loans, MCAs typically don’t require assets as collateral, reducing risk for the borrower.
Ready To Start?
a card transaction taking place

Examples of Merchant Cash Advance

Business A: Artisan Bakery Business

(illustration purposes only)

Business Profile: A popular bakery that processes most of its sales through card payments.

MCA Need: The bakery needs £15,000 to purchase a new oven and expand its product range.

Loan Details:

  • Advance Amount: £15,000
  • Repayment Rate: 12% of daily card sales
  • Typical Term: 6–9 months (based on sales volume)

Scenario:

  • The bakery receives the £15,000 advance upfront.
  • Repayments are made daily as 12% of card sales.
  • On a busy day with £1,000 in card sales, £120 is deducted. On a slower day with £500 in sales, £60 is deducted.
  • The bakery enjoys flexibility in repayments while expanding its product line.
a popular bakery with artisan breads

Business B: Fitness Studio

(illustration purposes only)

Business Profile: A boutique gym offering fitness classes, with a steady flow of members paying via card.

MCA Need: The gym requires £25,000 to upgrade equipment and add new features like a virtual workout studio.

Loan Details:

  • Advance Amount: £25,000
  • Repayment Rate: 10% of daily card sales
  • Typical Term: 8–12 months (based on sales volume)

Scenario:

  • The gym receives the £25,000 advance and invests it in upgrades.
  • Repayments adjust to match card revenue.
  • During a promotional period with high membership sales, repayments accelerate. During slower months, repayment amounts decrease, ensuring cash flow stability.
a person in a boutique gym

Why Choose an MCA?

A Merchant Cash Advance (MCA) offers businesses a flexible and fast way to access working capital, making it a lifeline for companies with fluctuating cash flow. Without an MCA, your business might struggle to:

  • Purchase Stock
  • Upgrade Equipment
  • Hire or Retain Staff
  • Expand or Renovate
  • Launch Marketing Campaigns
  • Bridge Seasonal Gaps
  • Develop New Products or Services
  • Pay Off Existing Debts or Consolidate Loans
  • Invest in Technology or Software Upgrades
a local clock shop in Bournemouth

Pros of a Merchant Cash Advance (MCA)

  • Fast Access to Funds- MCAs offer a quick approval and funding process, often delivering cash within 24–48 hours.
  • Flexible Repayments- Repayments are based on a percentage of daily card sales, so you pay less on slow days and more on busy ones, easing the burden during low-revenue periods.
  • No Collateral Required- MCAs are unsecured, meaning you don’t need to risk business or personal assets to secure funding.
  • Easy to Qualify- Approval is based on your business’s card sales history, not your credit rating, making MCAs accessible for businesses with limited credit history or new trading records.
  • No Fixed Monthly Payments- Unlike traditional loans, MCAs don’t have rigid repayment schedules—your repayments adjust dynamically based on your sales volume.
  • Flexible Use of Funds- MCA funds can be used for various business needs, such as buying stock, upgrading equipment, or funding marketing campaigns.
  • Seasonal Business Support- MCAs are ideal for businesses with seasonal income, allowing you to repay more during peak seasons and less during quieter periods.
All Set? Apply Today
a person happy discussing finance optioons

Types of Merchant Cash Advances (MCAs)

Merchant Cash Advances (MCAs) are flexible funding solutions, and businesses can access various types tailored to their specific needs and sales processes. Here’s a breakdown of the main types:

Traditional Merchant Cash Advances

Best For: Businesses with consistent card sales, such as retail stores, restaurants, or salons.

Split Withholding MCAs

Best For: Businesses looking for streamlined, hands-free repayment.

Lockbox or Trust Account MCAs

Best For: Businesses that want to manage repayments centrally.

Revenue-Based Financing MCAs

Best For: Businesses with diversified sales channels, such as online and cash transactions in addition to card payments.

Hybrid MCAs

Best For: Businesses seeking flexibility and a more predictable repayment schedule.

Industry-Specific MCAs

Best For: Niche businesses with unique sales cycles or revenue structures.

a small team discussing finance solutions

How does a Liquidity business loan work?

1

Apply Online

Start by submitting your application on our website, quick and easy!

2

We Search for the Best Lender

We scan our panel of trusted lenders to find the one that best fits your needs.

3

Connect with Your Lender

We introduce you to the lender, and they’ll take it from there to complete your application. You could get funds in as little as 24 hours.

Business Loans

What is a Merchant Cash Advance (MCA)?

A Merchant Cash Advance is a financing option where a business receives a lump sum payment in exchange for a percentage of future credit card sales or daily revenue until the advance is repaid.

How does a Merchant Cash Advance work?

The lender provides upfront funding, and repayment is made through a portion of daily sales, typically automatically deducted until the full amount plus fees is repaid.

How can a Merchant Cash Advance help my business?

An MCA can provide quick funding for cash flow needs, purchasing stock, equipment upgrades, or covering unexpected expenses. It’s particularly useful for businesses with consistent credit card sales.

What are the requirements to qualify for a Merchant Cash Advance?

Lenders typically require proof of consistent credit card or daily sales, bank statements, and a history of revenue. Credit rating requirements are usually less stringent than traditional loans.

How much can I borrow with a Merchant Cash Advance?

The amount depends on your business’s average monthly sales. Advances typically range from £5,000 to £500,000 or more.