Merchant cash advance (MCA)
A UK merchant cash advance is a lump-sum business loan repaid as a fixed percentage of your daily card-machine takings. Repayment scales with sales, so busy days repay more and quiet days less. Typical UK tickets run £3,500 to £500,000, factor rates 1.06 to 1.45, repaid over 6 to 12 months. Best fit for hospitality and retail with evidenced card flow above £5,000 per month. Decisions same day to 48 hours; funding inside 5 days.
At a glance
At a glance
- Ticket size
- £3,500 to £500,000
- Typical factor rate
- Quoted per offer
- Term equivalent
- 6 to 12 months (variable)
- Repayment
- % of daily card takings
- Decision
- Same day to 48 hours
- Funding
- Same day to 5 days after decision
- Personal guarantee
- Usually required (some no-PG options)
- Soft search
- Yes at quote stage
Already running more than one advance? See refinancing stacked merchant cash advances.
Founder & Managing Director, Muswell Rose, FundBiz
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind FundBiz. His background runs through commercial finance, mortgages and fintech, including as managing director of an invoice finance business. He oversees FundBiz's guides and lender reviews.
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How it works
You take a lump sum (the "advance"). Repayment is a fixed percentage of every card-machine transaction, taken at source by the acquirer or via a daily direct debit, until the agreed total (the advance multiplied by the factor rate) is paid. A £50,000 advance at factor 1.30 means you repay £65,000 in total.
The term is variable: when sales are strong, repayment finishes faster; when sales dip, the term stretches. There's no fixed end date, which is the model's defining feature.
| Advance | Factor rate | Total repayable | Cost of the advance |
|---|---|---|---|
| £10,000 | 1.15 | £11,500 | £1,500 |
| £25,000 | 1.25 | £31,250 | £6,250 |
| £50,000 | 1.30 | £65,000 | £15,000 |
| £100,000 | 1.40 | £140,000 | £40,000 |
Factor rate is fixed at the point of advance, applied once to the whole amount, not compounded like an APR. The providers we review quote the factor rate per offer rather than publishing a range, so compare the total repayment in each written offer.
Who it fits
- Hospitality (restaurants, pubs, cafés, hotels with strong card-payment flow).
- Retail (bricks-and-mortar shops, high-traffic e-commerce with strong gateway flow).
- Service businesses with card-machine acceptance (salons, gyms, mobile beauty).
- Borrowers with credit-history blemishes that make mainstream term-loan acceptance unlikely.
Who it doesn't fit
- B2B service businesses with bank-transfer or invoice-based revenue.
- Businesses with low or sporadic card-machine flow (under £5k a month).
- Borrowers prioritising rate over speed: term loans are materially cheaper.
UK lenders in this market
Capify, 365 Business Finance, Liberis, YouLend. Each has a different sweet spot on ticket size, sector specialism and credit-history tolerance. FundBiz doesn't rank or match applicants; any lender makes its own decision. Not sure MCA is the right product? Compare business finance options side by side first.
FAQ
What is a merchant cash advance?
A merchant cash advance is a lump-sum business loan repaid as a fixed percentage of your daily card-machine takings. Repayment scales with sales: busy days repay more, quiet days less.
Is MCA cheaper than a term loan?
Usually no. Over typical 6-12 month terms, factor rates work out to effective APRs far above headline term-loan rates; our factor-rate to APR converter shows the exact figure for your term. MCA is faster and more accessible than a term loan, not cheaper.
What card volume do I need to qualify?
Most UK MCA lenders want at least £5,000 to £10,000 a month in card-machine takings, evidenced by 3-6 months of statements. Lower volumes are accepted by smaller direct lenders but at higher factor rates.
Alternatives to weigh up
If your income comes through more than the card machine, revenue-based finance works the same way against total turnover rather than card takings alone. Online sellers should look at e-commerce funding, and where you can meet the criteria an unsecured business loan is usually materially cheaper than an advance. If the need repeats rather than being one-off, a revolving credit facility charges only for the days you draw, and a fixed lump sum over 3 to 18 months is compared on our short term business loans page.
Run the numbers first
MCA pricing uses a factor rate, not an APR. Convert your offer to a comparable annualised cost, then check your working-capital cycle to see how the daily-takings split lands against your float.
- MCA APR converter Factor rate to annualised APR equivalent, including holdback impact.
- MCA true-cost working model Excel model: how long the holdback takes to repay from your card takings, the pound cost and the APR-equivalent.
- Working capital cycle DSO plus inventory days, minus payable days. Reveals how much short-term finance you actually need.
MCA guides and deep dives
Go deeper on the parts of a merchant cash advance that decide the real cost and whether you qualify:
- Merchant cash advance explained The full walkthrough: structure, costs and when an MCA is the right call for a UK SME.
- MCA eligibility and requirements Card volume, trading history and documents UK MCA lenders ask for.
- How MCA repayment works Holdback percentages, the variable term and how repayment scales with takings.
- Factor rate to APR conversion Turn a factor-rate quote into a comparable annualised cost.
- Negotiating the daily holdback Where the holdback percentage is negotiable and how it changes your cash float.
- MCA for hospitality, retail and e-commerce How the model lands in the three sectors with the strongest card flow.
- MCA vs invoice finance Two working-capital routes compared on cost, speed and who each fits.