If you need a quick injection of capital, a Business cash advance could be the answer. The repayment rates varies between providers. Here are our cash advance five top tips! and how to get the best deal possible. January can be a difficult time for businesses of all kinds, but especially in the hospitality sector. Christmas is over and everyone is in a mood to diet for the new year which means that sales are slow. In some ways it will be nice to catch your breath after the hectic festive season, but at the same time your finances can suffer. If your cashflow is starting to look shaky a business cash advance can help.
Here are our top 5 tips that cover everything you should understand before taking out a business cash advance in 2020. It is important for any business owner to understand the implications and liabilities that they may incur when taking out business finance in 2020.
Business Cash Advance in the UK
Understand what a cash advance is
A Business cash advance in the UK is quicker and easier to set up than a loan. Your credit rating will not be as much of an issue and there’s less paperwork to be filled in. Decisions are made on the same working day and the money can be in your account within one or three days.
This is a cash advance against your credit or debit card sales which is why it’s such a good option for pubs and restaurants. They will look at your card sales and decide how much they are willing to advance. They will then receive a cut of future card sales until the sum has been paid off.
Is a merchant advance right for you?
A business cash advance may not be perfect for every company. It only focuses on revenue coming through card and debit card sales. If you are mainly paid by invoices or bank transfers, this might not be the best option.
Providers will look for a good track record of payments. Ideally, they will want to you be receiving around £30,000 or more per year through debit or credit cards. You must have at least six months’ worth of payment records to show. This type of alternative lending may be perfect for coffee shop funding as they take card machines, but not so good for a market stall holder who deals in cash.
Credit rating is not as important as with a bank loan, but it will still play a part in their decision and may impact the overall cost.
Business Cash Advance Costs?
Understanding the cost
The cost is determined by two things: your funding fee and the split percentage.
- A funding fee is the cost of advancing the money. This may vary from provider to provider, but costs can be quite high so it’s worth shopping around.
- The split percentage is the amount of your card receipts that you’ll be paying back. This may vary from month to month. So, for example, if you’ve agreed a 10% split and receive 20,000 through card receipts in month one. You will be paying £2,000 back to the provider. This will continue until you have paid back the overall amount plus the funding fee.
Generally speaking, this is a short-term lending option with most merchant cash advances being paid off between one and six months. If you’re using the money to cover a short-term expense a shorter payment period might be the best option. If it’s for a larger investment you might want to make it a little longer.
Many cash advance from business providers will also offer a discounted funding fee in return for a higher split of your credit and debit card revenues. So, for example, you could agree to a high split of around 30-40% in order to reduce the overall cost of the advance.
Business Cash Advance No Credit Check
Get your finances in order
Here is our top tips number 5 for a merchant cash advance. Although you won’t need as much paperwork as with other funding options. The Funder will still want to see evidence that your business is in reasonably sound working order. If you can show a good historic revenue stream. Funders will be more confident advancing the money as they know it will be coming back to them. There are no credit checks with a merchant cash advance.
This is also a good idea from your own perspective as you need to feel confident that this is something you can afford. Like many financing options, this is something you should only do for the right reasons. In other words, if your business is struggling and you’re simply trying anything to stave off disaster this could make things worse. However, if you know money will be coming in, it can be a great way to ensure your company remains on a sound financial footing.
Business cash advances UK will not be for everyone. Whether it’s right or wrong will largely depend on the provider you use and your own financial position. You should also take time to shop around to get the best deal. However, this has been proven to help many businesses of all kinds secure a welcome cash boost.
Apply now for a Cash Advance
We hope that our top 5 tips for a business cash advance helps answer a few questions you may have had. Should you like to know more simply complete the online enquiry form.