Merchant Finance

What is Merchant Finance?

Merchant Finance is a type of funding available to UK businesses, which allows business owners to borrow money against their current or future, debit and credit card sales.

Merchant Finance

Merchant finance works by allowing businesses to borrow money against their future debit and credit card sales. The lender will assess the business’s creditworthiness and ability to repay the loan. The repayments are automatically deducted from the business’ daily card sales until the loan is fully repaid.

Merchant finance can be a good option for businesses who rely heavily on card payments. The repayments are tied directly to their revenue, which can make budgeting easier.

• Repayments: are automatically deducted from the business’s daily card sales until the loan is fully repaid.
• Timescale: the application process for merchant finance can be more stringent, and it may take longer to receive the funds.
• Rates and fees: normally these are lower than Merchant Cash Advance

Merchant Cash Advance

A merchant cash advance is a type of financing where a lender gives a business a cash advance in exchange for a percentage of their future sales. This means that the lender will assess the business’s creditworthiness and ability to repay the loan, and if approved, they will provide the funds to the business owner.

In return, the business owner agrees to pay back the loan, plus interest and fees by allowing the lender to take a percentage of their daily or weekly sales. This occurs until the loan is repaid. Merchant cash advances are a convenient option for businesses that need quick access to funds.

• Repayments: are taken as a percentage of the business’s daily or weekly sales until the loan is repaid.
• Timescale: there is a benefit from quick access to funds, which can be particularly useful for businesses that need funding urgently.
• Rates and Fees: generally these are higher than Merchant Finance.