Merchant cash advance
A lump sum for businesses that take card payments, repaid automatically as a share of each card sale until the advance and a fixed fee are paid off.
- No security
How it works
A provider gives you a lump sum up front. In return, it takes a percentage of your debit and credit card sales, often around 10% of each sale, until you have repaid the advance plus its fee.
- The total to repay is set using a factor rate, a decimal number that is multiplied by the advance to give the total you repay.
- Repayments rise and fall with your card sales, so busy months pay it off faster.
- It usually takes 3 to 18 months to repay.
- You do not usually need to offer assets as security.
Because the fee is fixed, repaying early does not save you money, and the true cost can be hard to compare with a loan's APR.
Upsides and downsides
Upsides
- Fast. Money can arrive within hours of approval
- Less paperwork than a bank loan
- Repayments fall automatically when sales are slow
- No assets needed as security
Downsides
- Usually much more expensive than other options
- No benefit from repaying early
- Only works if most of your sales are by card
- Encouraging customers to pay in cash can break the contract
Risks
- Daily or weekly deductions can squeeze your cash flow
- Taking another advance to repay the first can lead to a debt spiral
What it costs
- How it is priced
- A fixed fee set by a factor rate, repaid as a percentage of card sales
- Costs that are easy to miss
- No saving from repaying early, because the fee is fixed
- The effective annual cost can be very high if you repay quickly
- Contract terms on factor rates and repayment percentages can be hard to follow
Based on your card sales. Providers look at recent bank and card statements.
Have a quote? Cost of a merchant cash advance or revenue-based finance: work out the APR-equivalent and total cost
Does it fit?
Could fit when
- Most of your sales are card payments, such as in retail or hospitality
- You need money quickly for a short-term need
- You expect card sales to be strong enough to repay within months
Unlikely to fit when
- A bank loan, overdraft or government-backed loan is available to you
- Your margins are thin
- Most of your customers pay by invoice, bank transfer or cash
Who can use it
- Business types: Sole trader, Partnership, Private limited company, LLP, Public limited company, Community interest company, Co-operative or community benefit society, Charity
- Needs sales (revenue)
- You take a steady volume of debit and credit card payments
- You can provide recent bank statements
Am I ready?
What a provider is likely to ask for. Tick what you have. Your ticks stay in this browser and nothing is stored. Checklist for all alternative and fast debt
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- Card sales history
- Bank statements
- True cost worked out
Regulation and protections
Commercial finance (finance for businesses rather than consumers) is not generally subject to statutory conduct regulation in the UK. Read the contract carefully and check the provider's complaints process before you sign.
Types of provider: Specialist merchant cash advance providers; Card payment and till providers; Online lenders.
Also consider
Sources
- British Business Bank: Small business owners guide to a merchant cash advance · checked 7 October 2026
- UK Finance: The Standards Framework for Invoice Finance and Asset-Based Lending (January 2025) · checked 7 October 2026