Card machine loans are also known as a merchant cash advance, it uses your card payment machine “Process Data Quickly” or PDQ Machine as it is also known.
The advance works by purchasing future debit and credit card payments from you at a discount, hence the term factor rate which will dictate the cost of borrowing.
This type of funding that is provided, is solely dependent on your monthly card terminal turnover. For example, if your business turnover £10,000 on credit and debit card sales then you could raise the same amount in way of a merchant cash advance, credit cards machine loan.
Traditional business lending is set with its own problems namely, that you could be faced with penalties, fees and charges if you don’t meet set monthly payments.
Worse still you will often find that these traditional bank style business loans are secured against your property or another asset which means they could be at risk if your business fails to meet the loan obligations. A merchant cash advance is a perfect alternative for business finance for any company that has seasonal work, as you only pay back when you earn.
What is a Card Machine Loan
A Card Machine Loan is a financial arrangement in which a business secures funds to acquire or upgrade its card payment terminals through a lending institution. These loans are specifically tailored to assist businesses in obtaining the necessary capital to invest in modern and efficient card processing equipment.
The funds acquired through a card machine loan can be used to purchase point-of-sale (POS) terminals that support various payment methods, including chip and pin, contactless, and mobile payments.
This type of financing enables businesses to stay competitive by offering convenient and secure payment options to customers. It’s essential for businesses to carefully consider the terms of the loan, including interest rates and repayment schedules, to ensure that the benefits of acquiring new card machines outweigh the associated financial costs.
How Does a Card Machine Loan Work:
A card machine loan works by the following process:
- Application Process: Businesses interested in acquiring a card machine loan begin by applying with a lending institution. The application typically involves providing details about the business, its financial history, and the specific purpose for obtaining the loan.
- Loan Approval: Once the application is submitted, the lending institution reviews the business’s creditworthiness and financial stability. If approved, the business is offered a loan amount along with terms and conditions, including interest rates and repayment schedules.
- Funds Disbursement: Upon acceptance of the loan terms, the funds are disbursed to the business. This capital is specifically earmarked for the purchase or upgrade of card payment terminals.
- Card Terminal Acquisition: With the loan funds in hand, the business can proceed to acquire modern card payment terminals. This may involve purchasing new machines with advanced features such as contactless payment options or upgrading existing terminals to meet industry standards.
- Repayment: The business is then required to repay the loan over a specified period, adhering to the agreed-upon repayment schedule. Payments may include both the principal amount borrowed and interest, and the terms are typically fixed for the duration of the loan.
- Benefits and Risks: While a card machine loan provides immediate access to capital for upgrading payment infrastructure, businesses need to carefully assess the cost of the loan, including interest rates, and consider the potential risks, such as technological obsolescence, to ensure a favorable financial outcome.
Advantages & Disadvantages of a Card Terminal Loan
As with any type of financial product there are a number of advantages get & disadvantages with card terminal loans, these include:
Eligibility
The good news is that business owners today have many more options when it comes to finding funding they did years ago.
To qualify for a merchant card machine loan, its so simple, here are the requirements:
- Credit score. Finance providers typically examine your personal credit report when you apply if you are a sole trader. If you’re already in business, prepare to submit a credit report for your limited company as well.
- Age of your business. To qualify for a cash advance loan you’ll need to be in business for at least 6 months. Your typical bank could require you to be in business for at least 2 years. You can consider a startup loan if your business is less than a year old.
- Annual revenue. Lenders often require businesses to meet a minimum level of income to be considered for a loan.
- Personal debt-to-credit ratio. It sounds counterintuitive, but some lenders will consider too much personal credit a risk — you could turn to that credit if your business runs out of money.
- Net operating income. To be sure that you can meet repayment requirements, some lenders look for a total income that’s at least 1.25 times greater than your total expenses.
- Potential collateral. If you’re applying for a secured business loan, you may need to identify an asset — equipment, inventory or real estate — to back the loan against default. If you’d prefer not to provide collateral, you’ll need to compare unsecured business loans.
Frequently asked questions
What is a Credit Card Machine Loan?
A card payment terminal is used to secure future lending for your business, so funds are advanced against an estimate of future credit and debit card takings.
How much does it cost?
With PDQ Funding you only have a single funding fee, this is determined by: Your card taking history The repayment percentage that suits your business The total of amount of funding you request
How are repayments made?
Firstly, you agree a percentage of your daily card takings that go towards paying the card machine advance. These are then automatically deducted when you make a sale through your card terminal. For periods when you don't have sales, no payments are made towards the merchant advance. This way payments work in line with your cash flow.
How Do I apply
Applying for a credit card processing loan could not be easier, follow the following simple steps:
Step 1: Read through our terms and conditions guides to ensure everything you need to know before applying.
Step 2: Click the apply button. You will asked you some basic details to verify your businesses position.
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- The amount you want to borrow
- Average monthly card sales
- Name of your business
- Company number if registered in England, Wales and Scotland
- Number of years you have been trading
Step 3: Your application will then be directed further down the page, where you will be asked to fill in your personal contact details, including:
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- Title, first name and surname
- Position in the business
- Email and telephone number
Step 4: After you accept the terms and conditions you will be able to click ‘get my quote’. From here your application will be processed and reviewed by one of our business finance managers.
Step 5: Once the application has been reviewed by one of our dedicated account managers, they will be in touch to discuss the terms of your advance agreement. At this point you are welcome to ask the lender anything you are unsure or have concerns about, including repayment plans, to make sure there are no nasty surprises along the way.
Step 6: After you have carefully read through all the terms of agreement, you will need to sign all of the relevant documentation and return it to us.
Step 7: You will then be able to access the money from your business account in just 48 hours
Lee Jones is a seasoned Business Finance Specialist with over two decades of invaluable experience in the financial sector. With a keen eye for market trends and a passion for helping businesses thrive, Lee has become a trusted advisor to countless organizations seeking to navigate the complexities of finance.