YouLend Loan: is revenue-based finance right for your business?

YouLend offers merchant cash advances (MCAs), a type of revenue-based financing.

Rather than following a traditional loan structure with fixed monthly payments, YouLend enables repayments based on a percentage of your daily card sales. This ensures that repayments fluctuate according to your revenue—during slower months, you’ll pay less, and during busier periods, repayments will be higher.

Here’s a quick overview of what YouLend offers:

• Loan amounts: Financing ranging from £3,000 to £1 million, depending on your card sales volume.
• Repayments: Repayments are a fixed percentage of your card sales, so there’s no set monthly amount.
• Approval speed: Fast approval and funding, often within 48 hours of your application.

Advantages of YouLend loans

YouLend’s merchant cash advance model offers several benefits, especially for businesses with seasonal or fluctuating revenues. Here are some of the key advantages:

• Repayments that scale with your business: Since repayments are based on a percentage of daily card sales, you won’t need to worry about fixed monthly payments during slower periods.
• Fast access to funds: As a digital lender, YouLend provides quick financing, with funds often available within 48 hours.
• Minimal paperwork: The application process is simple, and many businesses can link their bank accounts digitally via open banking, streamlining the approval process.

Disadvantages of YouLend loans

While YouLend offers distinct advantages, its merchant cash advance model may not suit every business. Here are some factors to consider before applying:

• Dependent on card sales: YouLend’s repayment structure is based entirely on card sales. If your business doesn’t rely heavily on card transactions or has fluctuating card revenues, this could be a limitation. Businesses with a mix of payment methods (e.g., cash, bank transfers) might not benefit as much from YouLend’s model.
• Higher cost: Merchant cash advances, including YouLend’s, typically come with higher fees compared to traditional loans, which can increase the overall borrowing cost.
• Limited flexibility: While repayments are flexible, the funding is tied to digital revenue. If your income sources are more varied or if you prefer more control over how and when to repay, this model might feel restrictive.
• Limited repayment control: Although the percentage repayment model adjusts with your revenue, there may be instances where a fixed repayment amount would be easier to manage, especially during higher-revenue months when you may want to retain more of your earnings.

Alternatives to YouLend loans

While YouLend’s merchant cash advance (MCA) model offers a flexible way to finance your business, there are situations where other financing options might be more suitable.

1. PDQ Funding Merchant Cash Advance
PDQ Funding provides a similar merchant cash advance product, offering businesses an alternative financing solution tailored to those reliant on card sales.

• Repayments linked to card sales: Much like YouLend, PDQ Funding’s repayments are based on a percentage of daily card sales. This means you’ll pay more when sales are high and less during slower periods, making it a flexible option for businesses with variable revenue.
• Quick and easy access to funds: With fast approval, PDQ Funding can provide funds quickly, allowing businesses to access capital when needed, often within 48 hours of approval.
• No fixed monthly payments: There are no set monthly repayments, making it easier for businesses to manage their cash flow during seasonal dips.
• Minimal paperwork: The application process is streamlined, and businesses can often connect their accounts digitally, speeding up the approval process.

It’s important to note that PDQ Funding’s model, like YouLend’s, is best suited for businesses that primarily rely on card transactions, so businesses with mixed or non-card revenue streams might find alternative forms of financing more fitting

2. Business Line of Credit
If you need ongoing access to capital rather than a one-off sum, a business line of credit may be a better choice. It provides you with funds as and when required, allowing you to draw from an agreed limit. Repayments are only due on the amount you borrow, making it a flexible option for businesses with fluctuating financial needs.

3. Invoice Financing
For businesses that issue invoices and are waiting for payments, invoice financing can help unlock cash that is tied up in unpaid invoices. This type of financing lets you borrow against your outstanding invoices, providing quick access to funds while you wait for customers to settle their bills.

4. Asset-Based Lending
If your business owns valuable assets, such as machinery or equipment, asset-based lending allows you to leverage their value for financing. This option lets you borrow against the worth of your assets while continuing to use them in your operations. It’s an ideal solution for businesses with high-value assets that need immediate liquidity.

Making the right choice for your business

In summary, YouLend’s merchant cash advance is ideal for businesses with fluctuating or seasonal revenues, especially those that rely heavily on card sales, such as retail stores, cafés, or e-commerce ventures.

YouLend may not be the most suitable option for businesses with diverse revenue streams or those needing predictable repayments for easier budgeting. For businesses with non-card income or those seeking larger, long-term financing, a product like PDQ Funding’s merchant cash advance could be a better fit, offering flexible repayments, no early repayment penalties, and wider eligibility criteria.