What is Merchant Cash Express – Express Funding for Business
Merchant Cash Express or a Merchant Cash Advance as its know. There are various companies online that offer this type of merchant cash express business loan, this funding line is daily offered to companies that take card payments via a PDQ Card Payment Terminal.
What does this mean? Financing companies that provide merchant cash advances consider your business’s future credit card revenue as assets. As such, they’re willing to advance your business cash with the promise of a return in the form of a portion of your business’s daily credit card revenues.
Merchant cash advances are repaid through a daily payment that your financing company will intercept before your credit card revenues reach your business’s bank account. It is crucial to understand that merchant cash advances ultimately end up being one of the most expensive business funding options.
The rates are expressed through decimals called factor rates that, on the low end, can range from 1.14 to 1.18. To figure out how expensive a merchant cash advance will be, multiply the factor rate by how much money you borrowed. For example, suppose you get a merchant cash advance of £10,000. If you pay a factor rate of 1.25, it will end up costing you £12,500. Even with a factor rate in the lower range, this cash advance costs you an extra £2,500 to borrow £10,000.
Although merchant cash advances are arguably the most expensive business funding option out there, they offer much-needed capital to businesses that might not be able to access it otherwise.
What Is Needed To Know About Merchant Cash Express – Merchant Cash Advances
Lets kick it off by talking about merchant cash advances. What are the benefits of this kind of unsecured business loan? What are the drawbacks? Should you get one, or are you better off with an alternative funding options?
PRO: The main strength of a merchant cash express – merchant cash advance lies in its repayment method. You see, instead of repaying in regular fixed instalments, you repay in a small, fixed percentage of your debit card and credit card transactions that is taken out automatically every single day. That gives you a lot of flexibility and ensures affordability. In addition, you do not need to secure it with an asset or have an exceptional credit score, because the advance is already secured by granting the lender access to your accounts.
CON: The problem with this is that in order to be able to get a business cash advance, your business needs to have transactions with credit cards and debit cards. Not only that, but you need to have at least 12 months’ worth of transaction history, as well as a minimum income from these transactions, in order to ensure that you can repay the loan.
How Much Can I Borrow With A Merchant Cash Express Business Loan
A Merchant Cash Advance is a cash injection of between £500 and £300,000. We typically advance up to one month’s card sales (so if you take £10k per month in card transactions, your maximum would be £10k).
How Much Will It Cost?
Merchant cash advances are generally offered with an agreed repayment amount upfront, for instance, an advance of £20,000 could have an agreed repayment of £24,000. The amount of time taken to repay the money is less clear, with repayments linked to your revenue.
This can make an APR comparison slightly tricky but is counterbalanced by the certainty of cost upfront.
Repayments are generally set as a fixed percentage of revenue through PDQ terminal (card terminal) payments, meaning use of PDQ systems is crucial for raising this type of finance.
How To Get Started
To qualify for a merchant cash express loan, you generally only need to have been trading for three months and ideally be taking over £500 per month in card payments. If you don’t quite meet these points. There is still no need to worry, we may still have funding options available to you.
Please complete the online enquiry form and a business funding specialist will contact you by return.