You may have heard about a form of lending known as a Merchant Cash Advance (MCA) which is currently growing in popularity. So what is an MCA and how can it be used by a small business? Read on to find out…
MCA’s are potential solution for businesses that need to maintain cashflow and are often applied for when it hasn’t been possible to secure a business loan. This is the case for many small businesses that apply for loans each year.
In fact net lending to small businesses in the UK has fallen from £3 billion in 2016 to just £700 million in 2017 which marks a substantial fall. The difficulty of obtaining a business loan from a traditional lender is as problematic as ever but all is not lost with a growing range of alternative options available.
The MCA doesn’t require any collateral to secure or even a personal guarantee. The money owed is simply paid back via card transactions. This makes this type of loan most suited to businesses that use card terminals on a regular basis to collect payments such as restaurants and retailers.
An up front cost is paid to receive a cash advance and the remainder of the advance is paid off by having a small percentage pf each card payment being paid to the MCA provider.
This makes repayments more flexible because the percentage remains the same and the amount paid will fall accordingly if takings are down.
If you would like to find out more about alternative sources of finance for your business contact us today.