What Is a Merchant Cash Advance: An Ultimate Guide

Need fast funding for your business, without the hassle of a bank loan? A Merchant Cash Advance (MCA) could be the solution. Designed for UK businesses that process card payments, an MCA gives you a lump sum upfront and lets you repay it through a percentage of your future sales. No fixed terms, no collateral, and minimal paperwork.

In this guide, we’ll break down exactly how MCAs work, who they’re for, and whether they’re the right fit for your business.

Plant Shop Owner Taking a Card Payment from a customer
Table of Contents

Introduction to Merchant Cash Advances

Running a business means balancing the day-to-day with planning for the future. Whether you’re managing seasonal dips, seizing a growth opportunity, or funding a new project, having fast and flexible access to capital can make all the difference.

One of the most popular options among small and medium-sized businesses in the UK today is the Merchant Cash Advance, or MCA. Unlike traditional loans that come with fixed monthly payments and lengthy applications, MCAs are quick, flexible, and based on your card sales.

But how exactly do they work? And is this type of funding right for your business? Let’s break it down.

Merchant Cash Advance Meaning – In Simple Terms

A merchant cash advance is a type of business funding that gives you a lump sum of money upfront. In return, you agree to repay the business advance through a small percentage of your daily card sales. Think of it as borrowing against your future debit and credit card takings.

It’s not a loan, so you won’t receive conventional interest rates or monthly repayments. Instead, payments rise and fall with your sales. If business is booming, you repay faster. If things slow down, your repayments shrink too.

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How Does a Merchant Cash Advance Work in the UK?

Here’s how a merchant advance works, step by step:

  1. Apply for funding through an MCA provider 
  2. Receive a lump sum, usually based on your average monthly card turnover.
  3. Repay gradually through a fixed percentage of your daily card sales.
  4. Finish repaying once the full amount has been covered.

Example: Let’s say you’re advanced £10,000 and agree on a factor rate of 1.15. That means you’ll repay £11,500 in total. If you do £1,000 in card sales per day and your repayment rate is 15%, you’ll repay £150 a day until the total is cleared. This structure makes MCAs incredibly flexible. You repay more when you earn more, and less when times are quiet.

Key Features of a Merchant Cash Advance

A merchant cash advance isn’t just another funding option—it’s designed specifically for businesses with high card turnover and unpredictable income. Here’s what makes it stand out:

Quick and Easy Access

MCAs are popular because of how fast the process is. There’s no long wait for bank approvals, and you don’t need to submit your accounts or management accounts. Often businesses receive funding within 48 hours.

Unsecured Funding

You don’t need to offer up collateral like property or vehicles. Approval hinges mostly on your card sales—not assets or even credit history.

Flexible Repayments

Since repayments are tied to your sales, they rise and fall with your income. If you have a slow week, you repay less. During busy periods, you clear more of the debt. This reduces financial pressure, especially during seasonal dips.

No Fixed Terms

Unlike loans with fixed monthly payments and rigid terms, MCAs don’t have a specific deadline. You simply repay as you earn until the full amount is covered.

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What Can a Merchant Cash Advance Be Used For?

A merchant cash advance can be used for almost any legitimate business expense.

Common uses include:

  • Expanding operations or opening new locations.

  • Buying stock or inventory to meet seasonal demand.

  • Upgrading equipment or repairing machinery.

  • Launching marketing campaigns to attract new customers.

  • Refurbishing premises for a fresh look.

  • Improving cash flow during quieter trading periods.

  • Covering emergency costs like urgent repairs or unexpected bills.

Because repayments are based on your card sales, an MCA is especially useful for funding projects that are likely to increase revenue.

Eligibility Criteria for a Merchant Cash Advance in the UK

Not all businesses will qualify for a merchant cash advance, but many more do than you might expect. Here’s what most UK providers are looking for:

Card Payment Volume

This is the most important factor. Your business should be processing at least £5,000 per month in card or online revenue. The higher your turnover, the more you can typically borrow.

Time in Business

Most MCA providers want to see that you’ve been trading for at least 3 months and are still currently trading. 

Industry Type

MCAs are ideal for retailers, restaurants, salons, garages, cafés, and any business that accepts lots of card payments. However, they’re less suitable for cash-only operations.

How Much Can You Borrow with a Merchant Cash Advance?

The amount you can borrow through a merchant cash advance depends entirely on your business’s card payment volume. Unlike traditional loans, where lenders look at credit limits and collateral, MCA providers look at how much you process through your card terminal each month.

Typical Funding Range

Most UK providers offer advances from £5,000 to £1m, though the final amount depends on your business performance. A common benchmark is: 100% to 200% of your average monthly card takings

Example: If your business takes £15,000/month via card payments, you may qualify for an advance between £15,000 and £30,000.

Repeat Advances

Once you’ve successfully repaid 60% of your cash advance, you will likely be able to “top up” your funding. This makes MCAs a revolving, ongoing source of working capital.

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How to Apply for a Merchant Cash Advance

One of the best things about merchant cash advances is how fast and painless the application process can be. Unlike bank loans, there’s no mountain of paperwork. Here’s what the typical process looks like:

Step 1: Quick Form

You complete a short application with details such as your name, company name and contact details.

Step 2: Approval

You will be sent an Open Banking authorisation link, so we can review your details and check your eligibility.

Step 3: Get an Offer

If you’re approved, you will be send a few different funding offers. This will include the advance amount and the total repayable sum.

Step 4: Funding

Once you accept one of the offers, you could receive the funds as soon as the next business day.

Ready to start your application?

Find out if you’re eligible and how much you can borrow in as little as 24 hours.

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Merchant Cash Advance Repayment Structure: How It Works

Repayment is where merchant cash advances shine, offering flexibility rarely seen in traditional finance.

How It Works

Instead of paying back a set amount every month, you repay via a fixed percentage of your daily or weekly card sales. This percentage is agreed upfront, typically between 1% and 20%.

No Set Term

There’s no end date or fixed term. You simply keep repaying until the total amount owed, including fees, is paid off.

Example:

  • Advance: £10,000
  • Factor Rate: 1.15 → Repay £11,500
  • Daily Card Sales: £250
  • Repayment: £38/day

Sales Down? Repayment Drops Too

If your card sales slow down, your repayments automatically shrink. This is why MCAs are ideal for businesses with fluctuating revenue, like hospitality or retail.

Benefits of Merchant Cash Advances

Merchant cash advances are popular for good reason. They offer flexibility, speed, and access, even when traditional lenders say no.

1. Fast Approval & Funding

Many businesses get approved within just 1–2 working days and receive funds in 2-4 working days. Perfect for seizing opportunities or managing emergencies.

2. Flexible Repayments

Your payments rise and fall with your income. You’re not locked into fixed bills during quiet months.

3. No Collateral Required

You don’t need to risk assets like property or vehicles. Your card sales history is your main qualification.

4. Usually No Impact on Credit Score

Most providers don’t generally report MCA repayments to credit bureaus. This means you can access funding without affecting your credit profile.

5. Easy Qualification

Even if your credit isn’t perfect, you can still qualify. You don’t need to submit accounts, what matters most is your consistent card revenue.

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When MCAs May Not Be the Right Solution for Your Business

While MCAs can be incredibly useful, they’re not right for every business. Here’s what to consider:

1. Cash-Only or Low-Volume Businesses

If most of your income doesn’t come from card payments, or your turnover is low, you may not qualify—or may receive a small advance.

2. Your Profit Margins Are Low

Because MCA repayments are based on revenue, not profit, businesses with tight margins may struggle.

3. You Want to Build Credit

Most MCA providers don’t report to credit bureaus, so even perfect repayment won’t improve your credit profile.

What Industries are Best Suited for Merchant Cash Advances?

Certain industries benefit more than others due to steady card revenue and seasonal trends. Here are some of the most common:

Retail

Shops with regular card transactions and fluctuating sales (like during holiday seasons) find MCA repayments manageable and responsive.

Cafés and Restaurants

Perfect fit due to daily card income and seasonal peaks. You repay more when it’s busy and less when it’s not.

Salons and Spas

These businesses often see unpredictable footfall. MCAs offer flexibility without locking them into hard-to-meet payments.

Hospitality

Hotels, event venues, and catering businesses benefit from repayments that scale with demand.

E-Commerce

Online businesses that process regular card payments can also qualify, provided they have steady volume.

Merchant Cash Advance vs Business Loan

If you’re comparing funding options, you’re probably wondering: How does a merchant cash advance stack up against a traditional business loan? The truth is, they serve different needs.

   

Is a Merchant Cash Advance Right for You?

Merchant cash advances are a powerful funding tool for UK businesses that process regular card payments and need fast, flexible access to capital. They’re especially valuable for:

  • Seasonal businesses
  • Retail and hospitality
  • Companies needing short-term cash boost

But they come with higher costs and less regulation, so it’s vital to:

  • Understand the factor rate
  • Read every contract carefully
  • Work with transparent providers

If your income is steady and you’re comfortable with the repayment model, an MCA can be a smart, stress-free way to fund your business—on your terms.

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Fill out a few quick details to find out your MCA options. No obligation, just fast funding made simple. Get a decision in as little as 24 hours.





    A cafe owner and merchant cash advance user, taking card payment from a customer over the counter.

    Frequently Asked MCA Questions

    Is a merchant cash advance a loan?
    No. It’s an advance based on future sales, not a traditional loan. There’s no APR or fixed repayment schedule.
    How fast can I get funding?

    Typically within 2-4 working days of merchant signing contracts.

    Do I need good credit?
    Not necessarily. Your card sales history matters more than your credit score.
    What’s a factor rate?

    It’s a fixed multiplier (e.g. 1.15 applied to the advance. It determines your total repayment amount.

    What happens if my sales drop?
    Your repayments drop too, since they’re a percentage of your card sales—not a fixed amount.