Why are businesses turning to Merchant Cash Advances?

Why are businesses turning to Merchant Cash Advances? image

With all the economic turmoil and uncertainty following the recent Brexit, why are businesses turning to the Merchant Cash Advance product? Capalona has taken a closer look.

Regardless of what’s happening in the world, businesses will always need access to finance to grow. But how do businesses grow when traditional funding options like bank loans become difficult to obtain? This is where Alternative Finance comes into its own, and the Merchant Cash Advance is a big part of that.

Economic Uncertainty

The UK hasn’t experienced this degree of financial uncertainty since the global downturn of 2008. When banks are facing economic insecurity, they quickly tighten the purse strings. A Merchant Cash Advance, however, is less reliant on the health of the economy.

Many SMEs have benefited from the Merchant Cash Advance product already, and the UK’s recent vote to leave the EU has boosted that reliance further. Other alternative options like Invoice Finance and Asset Finance have also gained popularity following the historic vote. The Merchant Cash Advance product appears to be the front runner at present, however.

What is a Merchant Cash Advance?

A Merchant Cash Lender will review your monthly card sales when assessing affordability. A Merchant Cash Lender will assess the last few months of your card sales, which will give them an idea on how much you can be advanced.

Roughly 10% of your future card sales will be used to repay the loan. This repayment style works in line with your cash flow. This means that, during better months, you’ll pay back the loan quicker, and slower months will result in lower repayments.

This type of product promotes healthy cash flow and is a great alternative to a standard bank loan. If you accept card payments and would like to discuss this product in more detail, get in touch with the Capalona team today.