What are the benefits of a Merchant Cash Advance?
Merchant cash advances (MCAs) have become increasingly popular in the UK as an alternative to traditional business loans.
An MCA is a type of financing that provides businesses with a lump sum of cash in exchange for a percentage of their future sales (commonly referred to as a sweep). In this article, we’ll explore the benefits of a merchant cash advance for UK businesses.
- Flexible repayment terms: MCA providers offer flexible repayment terms that are based on the business’s sales volume. This means that businesses only need to repay the advance when they make a sale, and the repayment amount is proportional to their sales. This can help businesses manage their cash flow and avoid the burden of fixed monthly payments that come with traditional business loans. This can be an excellent solution to seasonal businesses.
- Funding based on card sales: Traditional business loans can be hard to obtain for those businesses without a strong P&L. MCA lenders take in to consideration businesses card sales, not just their P&L and Balance Sheet. This can be a significant advantage for businesses that have a poor credit score or are unable to obtain traditional financing.
- Fast access to funding: One of the primary benefits of an MCA is that it provides businesses with fast access to funding. Unlike traditional business loans, which can take weeks or even months to process, MCAs can be approved in as little as 24 hours. This makes them an ideal solution for businesses that need cash quickly to cover unexpected expenses or take advantage of new opportunities.
- No security required: Another advantage of an MCA is that it doesn’t require collateral. Traditional business loans can require businesses to put up security, such as property or equipment, to secure the loan. With an MCA, the financing is based on the business’s future sales, so there’s no need for collateral.
- Use the funds for any business purpose: An MCA can be used for any business purpose, including purchasing inventory, expanding the business, or covering unexpected expenses. This makes it a versatile financing option for businesses that need cash for a wide range of reasons.
In conclusion, a merchant cash advance can provide UK businesses with fast access to funding, flexible repayment terms, and the ability to use the funds for any business purpose.
Additionally, because MCAs don’t require security and can potentially be obtained by those with weaker P&Ls, they can be an excellent option for businesses that need cash quickly and can’t obtain traditional financing.
If you’re a UK business owner in need of funding, an MCA may be worth considering.