Sourcing finance, Supporting growth
Business loans and asset finance for equipment, growth and cash flow
By submitting this form you agree with the terms and conditions provided and acknowledge that you have read, and agree to proceed, with our standard terms of business and privacy policy – https://thefundingstore.co.uk/privacy/
Sourcing finance, Supporting Growth
Business loans and asset finance for equipment, growth and cash flow
By submitting this form you agree with the terms and conditions provided and acknowledge that you have read, and agree to proceed, with our standard terms of business and privacy policy – https://thefundingstore.co.uk/privacy/
Welcome to The Funding Store’s FAQ
Here are some of the most frequently asked questions.
If you have a question that is not answered below, or require further information on a question, then please do not hesitate to contact us.
A Merchant Cash Advance (MCA) is a unique type of funding product that allows a business to receive a lump-sum payment in exchange for an agreed-upon percentage of future credit and debit card sales.
The defining characteristic of an MCA is its repayment structure: the business pays back the advance by giving a portion of its daily card transactions directly to the MCA provider.
This percentage is fixed, but the actual amount varies depending on the volume of the day’s sales.
While it shares similarities with a traditional loan—namely, the provision of upfront capital—an MCA differs in several key ways.
Most notably, repayment is tied to the business’s daily card sales, making it a more flexible option that adjusts to the rhythm of your business cycle.
Therefore, it’s more accurate to refer to it as a sale of future revenue rather than a loan.
The beauty of an MCA lies in its versatility.
You can utilise this type of funding to cover any operational expenses, such as purchasing inventory, upgrading equipment, expanding workforce, paying unexpected bills, or smoothing out cash flow fluctuations.
An MCA is a flexible tool designed to fuel the growth and stability of your business.
MCAs are particularly suited to businesses that process a high volume of card transactions.
Industries that frequently leverage MCAs include restaurants, retail stores, beauty salons, and e-commerce businesses.
Seasonal businesses, like holiday retailers or agricultural businesses, also find MCAs beneficial due to the alignment of repayments with their revenue stream.
The cost of an MCA is determined by a factor rate, which is a decimal number usually between 1.1 and 1.5.
This rate, when multiplied by the advance amount, gives you the total amount your business is expected to pay back.
The factor rate includes the cost of financing, making it a straightforward way to understand the cost associated with the advance.
The factor rate is a tool used in the MCA industry to represent the cost of funding.
Unlike an interest rate, it is not annualised and is calculated only once at the start of the agreement.
It applies to the full advance amount, so even as you repay the MCA, the remaining balance does not decrease as it would with a traditional loan.
In the context of MCAs, a sweep refers to the daily process whereby the agreed percentage of card sales is automatically taken from your business’s account and paid to the MCA provider.
This process continues until the advance is fully repaid.
MCAs offer a variety of benefits. They provide quick access to funding, often in a matter of days.
They don’t require security, making them a good fit for businesses lacking substantial assets.
Their repayment structure is flexible, automatically adjusting to your daily sales volume.
Finally, MCAs are accessible to businesses with less-than-perfect credit since approval is mainly based on consistent card sales.
MCAs can be more expensive than traditional loans due to higher factor rates.
They’re also reliant on your business maintaining a steady volume of card sales.
An unexpected slump in sales could prolong the repayment period.
Furthermore, the daily withdrawals could affect your cash flow if not carefully managed.
Yes, MCAs are legal and regulated financial products. They are considered a sale of future revenue, not a loan, so they are not governed by lending laws.
However, providers are required to disclose all terms and conditions, including the factor rate and repayment method, ensuring transparency.
MCAs are structured around your daily card sales, so an increase in sales could lead to an early repayment.
However, since the cost is set at the beginning, paying early won’t typically save you money as it would with a traditional loan.
An MCA itself does not directly impact your credit score as providers do not usually report to credit bureaus. Though some lenders will take soft searches, some hard searches and some may take a directors search.
However, if using the MCA leads to financial strain and late payments on other obligations, your credit score could be indirectly affected.
Yes, it’s possible.
MCA providers focus more on your daily card sales than your credit score.
So, even if your credit history is not stellar, you may still qualify for an MCA if your business consistently processes substantial card transactions.
MCAs don’t have an interest rate in the traditional sense.
Instead, they use a factor rate to determine the cost of the advance.
This rate is set at the beginning of the agreement and is a multiple of the advance amount.
It’s essential to understand that a factor rate is not an annual percentage rate (APR).
The cost of an MCA can be higher than traditional financing options.
Yes, both sole traders and partnerships can potentially qualify for an MCA.
The key requirement is a consistent volume of credit or debit card transactions.
Yes, with an MCA, you can typically continue using your existing card machine provider.
In short a Corporation tax loan allows your business to spread the cost of its VAT bill over 6, 10 or 12 affordable monthly payments, giving your business the added benefits of:
- A rolling facility annually
- Quick and simple to arrange
- Paid directly to HMRC
- Takes the pressure off cash reserves
- Smooths cash flow peaks and troughs
- No deposit required 0+ profiles
- No Director Guarantees on applications up to £150,000, selected lenders
Asset finance is a type of funding that gives your business the ability to access assets such as vehicles, machinery, and equipment without the need to pay for the full cost of the asset upfront.
These types of agreement typically involve regular payment for use of the asset over an agreed period of time.
We have lenders that can offer funding from £1,000 up to £10million.
Almost any asset, from vehicles, equipment and machinery to soft assets, such as IT hardware and software.
Contact one of our business managers today to see if we can finance your next asset purchase
Some of our lenders will allow up to 100% loan to value, typically on new assets, excluding VAT.
Asset-based lending, commonly known as asset refinance, is a way of using the existing business assets to raise funding based on their equity value on the balance sheet.
This can be useful if you want to raise funding for cashflow, boost working capital or put down a deposit on a vehicle, machinery, or equipment.
We can consider applications from new starts up to experienced businesses including sole traders, partnerships, limited liability partnerships and limited companies.
Each application is treated on its own merit, including the strength of the business, your experience, and the plans for the future.
For new starts our funders will look for director / personal guarantees in the background.
Complete our asset finance contact form, or contact us on 01908 880420, and one of our business managers will speak with you to obtain further information relevant to your application, to help tailor the quote and product to your specific requirement.
We can also answer any questions that you may have.
Let’s looks at the three most commonly used types of agreements.
Hire Purchase
This is a very simple way to purchase an asset and spread the payment over a fixed amount of time, typically monthly. The asset will appear on your balance sheet, and you will be responsible for maintenance and insurance costs. You will take full ownership of the asset once the agreement ends, and the last payment is made.
- This type of agreement includes interest, with the full amount of the asset paid for over an agreed period of time, typically 12 months up to 8 years.
- Each instalment includes an interest charge, which is agreed at the outset.
- VAT paid upfront. There will be no VAT charges on each rental instalment.
- Ownership upon completion of the agreement.
- Full ownership once the final payment is made, typically with a small option to purchase fee, meaning that you will own the asset outright.
Finance Lease
This type of agreement is for those who want flexibility at the end of an agreement. These types of agreements include three parts to each payment made, which are asset cost, interest, and VAT.
- Flexible payment terms, you can keep the monthly instalment low, by paying a larger deposit, or agreeing to a balloon payment at the end of the agreement. The balloon payment will typically be less than the anticipated market value of the asset, which would allow the asset to be sold to settle the outstanding balloon.
- VAT paid on each instalment, allowing assets to be more affordable to smaller businesses and non-VAT registered businesses who would not be able to reclaim the full upfront VAT cost.
- Flexible end of agreement options allows you to carry on using the equipment with additional instalments or sell the equipment and potentially keep some of the proceeds.
Operating Lease
With an operating lease, the agreement is normally shorter than the economic life of the asset, this allows the leasing company to use the resale value to offer reduced payments over the agreed term.
- All of the risks, and rewards, that come with asset ownership remain with the leasing company, not you.
- At the end of the agreement, you will no longer be able to use it and it must be returned in good condition. All terms and restrictions must have been adhered to, or you could incur additional costs (e.g., mileage / hours).
- Repayments are treated as an operational expense, so they do not appear on your balance sheet.
- Ability to change / upgrade equipment more frequently.
Information that we will need to proceed.
- Director(s) full name(s) and contact details.
- Full business name, address, phone number and email address.
- Industry and date you started your business.
- Annual turnover of your business.
- Full details of the asset that you are looking to purchase.
A business loan is a loan that is intended to be used for business purposes only. Business loans are offered by lenders, to businesses, using criteria which they set.
In exchange for a business loan, lenders will add an arrangement fee plus interest, which is then repaid on a set schedule over a set term.
Interest rates can vary from lender to lender as can the qualifying criteria.
We have lenders that can offer funding from £1,000 up to £10million.
- What is the purpose of the business loan
Cashflow, unexpected bill or an asset purchase, if the latter then you may want to consider asset finance, it may potentially be a better product for your business.
- Work out how much you are looking to borrow
If you are looking for a business loan for cashflow purposes, then you may want to use a qualified professional to assist with a cashflow forecast to work out what the potential borrowing will need to be.
- Calculate what you can afford to repay
Work out what the business can afford to repay monthly, remember that though a longer term may bring the monthly payments down, you will pay more in interest over that longer term.
Again, we recommend talking to a qualified professional to assist with this.
- Decide between a secured or unsecured business loan
Some of our lenders will offer both unsecured and secured options, we recommend that you always take independent legal advice before proceeding.
- Understand the fees and charges
Make sure you understand the true cost of any business loan by comparing all the fees and charges.
Not all, but most of our lenders do charge an arrangement fee for unsecured and secured business loans, these will be provided to you with any conditional offers that you may receive.
Please remember that any offer you receive is non-obligatory and you do not have to proceed.
- Speak to our business managers
If you have any questions or queries about an offer that you have received, then please do not hesitate to contact one of our business managers on 01908 880420.
There are a variety of different types of business loans on the market, so make sure that you research what product will be most suitable for your business.
Some of the types of business loans that we can source.
- Revolving credit facility | Business line of credit
If you are looking for flexibility, then this option should be considered. Only make repayments based on the drawdown amount and repay at any time with no early repayment charges.
- Unsecured business loans
Business term loan up to 6 years with a fixed interest rate, allowing you to budget over the term of the agreement. No early repayment charges, settle early, save on future interest.
- Secured business loans
Sometimes businesses need to provide security, either due to the amount, or due to the additional risk that the lender is taking. Either commercial or residential property as security will be requested with our secured loans. Fixed interest rates with terms up to 20 years.
- Merchant cash advance
Most commonly it is used in retail, hospitality, and e-commerce businesses, who take online payments, however a range of small businesses can use a merchant cash advance.
Rates, terms and amounts can vary lender to lender, but you can potentially release up to 100% of your 3-12 month average card sales. Making repayments flexible as you only repay as you earn, with no penalties or charges for faster or slower repayments.
- Short term business loans
We have lenders that can offer fast funding options over a short term for up to £200,000. These options are typically more expensive than traditional unsecured business loans.
- Commercial mortgage
A commercial mortgage is a great way to raise funding for a commercial premise purchase, be it your current premises that you are renting or moving your business to a new site, maybe due to expansion and growth.
We have a property expert available to call you back at a convenient time.
We can consider applications from new starts up to experienced businesses including sole traders, partnerships, limited liability partnerships and limited companies.
Each application is treated on its own merit, including the strength of the business, your experience, and the plans for the future.
For new starts some of our funders may look for secured funding.
Things taken into consideration from our panel of funders.
- Business and Personal credit score.
- Age of your business.
- Annual turnover.
- Profit and Loss account.
- Balance sheet.
- Affordability.
- Outstanding creditors.
Complete our business loans contact form, or contact us on 01908 880420, and one of our business managers will speak with you to obtain further information relevant to your application, to help tailor the quote and product to your specific requirement.
We can also answer any questions that you may have.
Information that we will need to proceed.
- Director(s) full name(s) and contact details.
- Full business name, address, phone number and email address.
- Industry and date you started your business.
- Annual turnover of your business.
- How much you are looking to borrow.
- How you intend to use the funds.
In short a VAT loan allows your business to spread the cost of its VAT bill over 3 months, giving your business the added benefits of:
- A rolling facility each quarter
- Quick and simple to arrange
- Paid directly to HMRC
- Takes the pressure off cash reserves
- Smooths cash flow peaks and troughs
- No deposit required 0+3 profiles
- No Director Guarantees on applications up to £150,000, selected lenders
