Business Finance from PDQ Funding

What is a Merchant Cash Advance?

Merchant cash advance is an unsecured lending product for businesses, it uses your card payment terminal to secure future borrowing. This type of funding is already proving very popular with businesses that operate in the retail and the hospitality / leisure sectors. Any business that receives payment via a card terminal can apply to get a finance with us.

The process will allow funding to be released against your future card sales. The amount of funds made available to you is mirrored with your average monthly card transactions. Repayments are set at percentage of each sale until the advance is paid off.

Typical repayment timescales are anything from 6 to 9 months, but dependent on your businesses history it can be can be as long as 18 months term. Once a positive repayment history is shown with your business, you may be able to top-up your funding. This will allow the amount that is borrowed and allow an extension of the term.

This type of unsecured funding is currently not an FCA regulated product. This allows the product to be fast & flexible. An ideal solution for businesses without many assets to use as security.

Business Cash Advance Advantages

Every business needs capital from time to time but a bank loan isn’t always accessible. In some cases it just might not be the right option for your business. A Business Cash Advance offers a very different way of receiving a financial boost but without so many restrictions on the repayments.

Business cash advances gives the lender rights to claim a proportion of your future sales in return for giving you business funding upfront. Working with the company that provides the card terminal and processes payments, the business cash advance lender will receive an agreed proportion of future transactions until the cash advance is paid off.

The main advantage with this type of borrowing is that there is no credit checks, so this type of borrowing can be very quick to arrange. Most lenders can arrange for funding to be in place within 48 hours. The funds will arrive in your business account soon after.

Probably the best advantage is due to your sales determining the amount you can borrow there is no need to give personal guarantees or any other kind of security.

FAQ – Business Cash Advance

How much can my business borrow?

The amount you can borrow is dependent upon your monthly card takings turnover, this is taken as an average over the last six months. The greater the sales turnover that goes through your card machine, the larger amount you can get advanced. If your business has a monthly average of £10,000 in sales via your PDQ Machine per month. The amount of funding you qualify for would be the same amount. Subject to underwriting the funding you could receive via a merchant cash advance could be up to 150% of your monthly card turnover meaning you could receive a larger sum.

Credit levels that are available to your business via a lump sum are generally between £5,000 and £200,000. It has been known to support businesses with greater amounts.

What is the term can I borrow for?

Merchant cash advances are a short-term funding product meaning the term of the loan has a maximum of 18 months. The repayment time is dependent on your business performance from your credit card payments or debit card payments. This is great is sales are slow, meaning you pay back less, when sales are good the amount is paid back faster. Typical periods to make repayments are 6 to 8 months. As it is classed as flexible finance repayments can be as short as 4 months and stretch to a maximum of 18 months. Subject to affordability and the companies repayment history you will be offered an option to top-up your funding. This will allow you to increase the borrowing and extend the current term.

Will my business qualify?

Your business needs to meet certain criteria to qualify for funding. It has to be a limited company, partnership or sole trader with a registered office based in Scotland, England and Wales. Customers must pay via a PDQ machine or online sales through an ecommerce merchant gateway provider.

There is a number of industry types & trades that qualify for a business cash advance. The following examples is not a comprehensive list. Don’t panic if your business type is not shown: hospitality and retail, shops, restaurants, hotels, coffee shops, cafes, MOT service stations and garages. The all receive payments from their customers via card payments.

Your business needs to have been trading for a period of six months and turning over at least £5,000 in card sales a month

How much does the advance cost?

Our pricing structure is based on a number of factors, each business is unique and so are our quotations. Commercial finance is based on a straightforward calculation of a number of factors. The cost to your business is calculated on something that is called a factor rate, this gives you a total repayment figure. When you make a sale and your customer pays by card a percentage of that sale goes to make the repayment of the loan amount until it is paid off in full. It is one simple payment there are no other charges or costs associated with this type of borrowing.

To establish a costing the lender gives you a factor rate based on your monthly card turnover . This will dictate the risk, and gives the percentage of each sale that is required to repay back to the lender

Factor rate what is it? and how is it calculated?

If you are comparing the cost of a merchant cash advance against say a business loan you will come across the term ‘factor rate’. Factor rates vary from about 1.1 to 1.5, these are depending on your industry type. The number of years you have been in business, plus the frequency of your sales, and your average monthly credit card sales.

Example of a factor rate : Advance of £10,000 based on your monthly sales volume.  The lender issues a factor rate of 1.25. (£10,000 x 1.25 = £12,500 total repayment for a 12-month term).

Unlike interest rates, which can compound as you pay off the loan these can change as the debt decreases, factor rates apply only to the original advance amount

Are the monthly repayments fixed?

The monthly repayments are not fixed! This is not classed the same was as a business loan, there is no APR or fixed term. As it is based on your card payments within your business, there is no set repayment term. A small repayment is taken on each transaction until the advance is repaid in full. This type of finance works well with businesses that have seasonally adjusted sales.

Will my credit rating be affected by making an application?

No soft credit checks are carried out during the application process. Once you have been approved for finance, lenders will make a hard credit search against your company, this is carried out by a credit reporting bureau. Warning late payment and missed payments may affect your credit score causing make money problems.

We process payments online can you help?

E commerce businesses work in the same way as if you are a bricks and mortar type of business who use standard PDQ merchant terminals. If your Ecommerce business uses an online payment processer such as Stripe, Worldpay Online, Shopify Payments, Paypal Online payments, SagePay, Amazon Pay, Payoneer, Klarna, Adyen, 2Checkout or any other online payment gateway, merchant cash advance lenders UK will be happy to work with you.