Your card sales profile
- Average monthly card turnover
- Card terminal (PDQ) or e-commerce gateway provider
- Last 3 to 6 months of card processing statements
- How long you have been taking card payments
Merchant cash advance
A lump sum advance repaid as a percentage of your future card sales. Repayments flex with your trading. Compare options from UK lenders. Funded in 24 hours.
- £3,000 to £300,000, funded within 24 hours of approval
- Repayments flex with your card sales, slow weeks cost you less
- Also called Business Cash Advance, PDQ Funding or Card Machine Loan
- Independent commercial finance broker
Last updated: June 2026
What is a merchant cash advance?
A merchant cash advance (MCA) is a lump sum advanced to a business that takes card payments, repaid automatically as a percentage of each card sale until the agreed total is paid off. There is no fixed monthly payment and no fixed term. When sales are strong, the advance is repaid faster. When sales are slow, the repayments are smaller.
The product is also known as a Business Cash Advance (BCA), Card Machine Loan, PDQ Funding, PDQ Loan, Credit Card Processing Loan or Merchant Loan. These terms are interchangeable. The product is sometimes grouped with revenue-based finance, although strictly speaking MCAs are based specifically on card sales rather than total revenue.
Technically, an MCA is not a loan. It is a sale of a portion of future receivables. This matters for the way pricing works (factor rates, not APR) and for the regulatory treatment, both of which are explained below.
How a merchant cash advance works
Five steps from application to repayment.
- 01
Apply with your card sales data
You share recent business bank statements and card terminal statements, typically the last 3 to 6 months. These show your average monthly card turnover, which determines what you can borrow.
- 02
Receive an offer
A lender offers an advance amount, a factor rate that sets the total repayable, and a sweep percentage, the share of each card sale that goes to repayment. The offer usually arrives within 24 to 48 hours.
- 03
Sign and receive funds
Once you accept, funds typically land in your business bank account within 24 hours. Your card terminal setup does not change.
- 04
Repay automatically via card sales
The agreed sweep percentage, usually 10% to 18%, is deducted from each card transaction and sent to the lender. Cash sales are unaffected.
- 05
Repayment completes when the total is paid
There is no fixed end date. Strong trading repays faster, slow trading repays slower. Typical repayment takes 6 to 12 months. Once complete, many lenders offer top-up funding.
What you'll need
A few details up front let us match you to merchant cash advance lenders faster and price the advance accurately.
Your business
- Companies House number and registered trading name
- Date of incorporation and length of trading
- Annual turnover and sector
- Last 3 to 6 months of business bank statements
Funding requirement
- How much you want to borrow
- What the funds are for
- Whether you have an existing advance to refinance
We do not run a credit search at the enquiry stage. A formal search happens only once you accept a lender's offer.
Factor rates explained
MCA pricing uses a factor rate, not an interest rate. This is the single most important thing to understand before you sign an agreement.
A factor rate is a fixed multiplier, typically 1.1 to 1.5, that determines the total amount you will repay. You multiply the advance amount by the factor rate to get the total repayable.
Worked example
Borrow £30,000 at a factor rate of 1.25. The total repayable is £30,000 multiplied by 1.25, which is £37,500. The £7,500 difference is the cost of the advance.
A factor rate is not the same as an interest rate, and the difference matters in two ways.
01 Interest accrues, a factor rate does not
If you repay an MCA faster than expected, you do not save money. The total repayable is fixed at the moment you sign. This is the opposite of a traditional loan, where early repayment saves interest.
02 The equivalent APR is much higher
A factor rate of 1.25 on a 6-month repayment is roughly 50% APR. A factor rate of 1.3 on a 12-month repayment is roughly 60% APR. The shorter the repayment period, the higher the equivalent APR, because you pay the same fixed cost over less time.
What determines your factor rate
- Strength and consistency of card sales (lenders want to see at least 3 months of consistent activity)
- How long you have been trading (most lenders want 6 or more months)
- Industry risk profile (some sectors carry higher rates)
- Cash flow as evidenced by your bank statements
- Existing borrowing and credit history
| Factor rate | On £20,000 advance, total repayable | Roughly equivalent flat cost |
|---|---|---|
| 1.15 | £23,000 | 15% |
| 1.25 | £25,000 | 25% |
| 1.35 | £27,000 | 35% |
| 1.45 | £29,000 | 45% |
Equivalent flat cost shown here is not APR. APR is higher because it accounts for the repayment period. A factor rate of 1.25 repaid over 6 months is roughly equivalent to 50% APR.
Merchant cash advance vs business loan vs invoice finance vs RCF
Four products that get compared often. They all fund short-term cash flow, but with very different cost structures and use cases.
| Feature | Merchant cash advance | Business loan | Invoice finance | Revolving credit facility |
|---|---|---|---|---|
| Repayment structure | Percentage of card sales | Fixed monthly payment | Lender takes invoice payment | Pay on drawn balance only |
| Repayments flex with revenue | Yes (with card sales) | No (fixed) | Linked to invoice payments | No (fixed schedule on draws) |
| Speed to funding | 24 hours typical | Days to weeks | Days for first draw | Days to weeks for facility |
| Total cost expressed as | Factor rate (1.1 to 1.5) | APR (5% to 25% typical) | Discount fee (1% to 5% per invoice) | Interest rate (7% to 25% p.a.) |
| Early repayment saves cost | No | Often yes | Yes (per invoice) | Yes |
| Suits which businesses | Card-heavy: retail, hospitality, e-commerce | Most SMEs with steady income | B2B SMEs with unpaid invoices | Recurring short-term cash flow needs |
| Security needed | None (unsecured) | Sometimes | Invoice book | Often a personal guarantee |
Indicative ranges. Actual terms vary by lender, business profile and security available.
How much can I borrow?
Most lenders advance between 100% and 200% of your average monthly card turnover. The typical range is £3,000 to £300,000, with facilities up to £1 million available for established businesses with strong card sales history.
Typical advance
£3k to £300k
Larger facilities, up to £1,000,000 or more, are available for established businesses with a strong, consistent card sales history.
Advance multiple
100% to 200%
Of your average monthly card turnover. Higher and more consistent card sales unlock a larger advance.
Worked example. A restaurant with £20,000 in monthly card sales could typically borrow between £20,000 and £40,000. At a factor rate of 1.25 on a £30,000 advance, the total repayable is £37,500. With a 12% sweep rate, roughly £2,400 of monthly card sales goes to repayment, taking about 16 months at steady trading levels.
No upfront fees on most facilities. Most MCAs do not charge arrangement fees, valuation fees or admin fees. The total cost is the factor rate. Some lenders may charge a small enrolment fee, which should be disclosed upfront.
No early repayment discount. Because the cost is fixed at signing, you do not save money by paying the advance off faster.
For longer-term or larger funding needs, a business loan or revolving credit facility is usually cheaper than an MCA. We will tell you plainly if one of those is the better fit for your situation.
Is a merchant cash advance right for your business?
An MCA suits businesses with strong card sales that value speed and flexibility over the lowest possible cost.
-
You take a substantial volume of card payments
MCAs are designed for businesses with consistent card sales through a terminal (PDQ) or e-commerce gateway. Cash-heavy businesses or pure B2B invoicing businesses are not suitable. Typical sectors are retail, hospitality, e-commerce, health and beauty, garages and trade.
-
You have at least 3 to 6 months of trading history
Most lenders want to see card sales activity over a meaningful period. New businesses with less than 3 months of card sales will struggle to qualify.
-
You need money quickly and accept the cost trade-off
MCAs are faster than traditional loans and more flexible on repayments, but the cost per pound borrowed is usually higher. If speed and flexibility matter more than cost, an MCA can be the right tool. If cost matters more, a business loan or revolving credit facility is usually cheaper.
-
The advance can be repaid within 6 to 18 months
MCAs are short-term. They are not designed for long-term capital needs. Using one for a long-term need usually means refinancing into another MCA later, which compounds the cost.
-
Your business structure qualifies
FundingLinks arranges merchant cash advances for UK limited companies, LLPs and PLCs that take card payments. We do not broker for sole traders. Some lenders limit certain sectors or sizes.
Pros and cons of a merchant cash advance
An MCA buys speed and flexibility. It costs more than traditional lending, and that trade-off should be clear before you sign.
Pros
- No fixed monthly payments, repayments flex with card sales
- Funded within 24 hours of approval
- No upfront fees on most facilities
- Unsecured, no need to pledge business assets
- Available to businesses with shorter trading history or weaker credit
- Cash sales are unaffected, only card sales contribute to repayment
- Top-up funding is often available once a positive repayment history is established
Cons
- More expensive than most traditional lending. Factor rates of 1.2 to 1.5 mean you repay 20% to 50% on top of the advance.
- No saving from early repayment. The total repayable is fixed at signing.
- Frequent deductions from card sales can squeeze daily cash flow.
- Only works for businesses with substantial card sales.
- Encouraging customers to pay cash to reduce deductions can be a breach of contract.
- Refinancing an MCA with another MCA compounds the cost and can lead to a debt cycle.
- Less suitable for long-term funding needs.
How FundingLinks finds your merchant cash advance
We help you compare the market on cost, not just speed, so you can see what an advance really costs.
- 01
Tell us about your card sales
Share your business details and recent card processing statements. We use this to gauge what you can borrow and at what cost.
- 02
We compare lenders
We compare offers from MCA-specialist lenders on the panel. We show you the factor rate, the total repayable, the sweep percentage and the expected repayment period for each.
- 03
You pick on full information
Cost transparency matters with this product. We will not just give you the fastest offer, we will show you the cheapest. If a business loan or revolving credit facility would be cheaper for your situation, we will tell you that too.
- 04
Funds in 24 hours
Once you accept and sign, funds typically arrive in your business account within 24 hours. Repayments start with your next card transactions.
Why businesses choose FundingLinks
Specialist support for UK SMEs comparing merchant cash advance and alternative funding.
- 100+
- UK lenders compared
- 500+
- SMEs funded
- 35+ years
- Combined commercial finance experience
Whole-of-market panel
100+ UK lenders, including high-street banks, challenger banks, specialist lenders and alternative finance providers. We are an independent broker, not tied to any single lender.
Specialist, founder-led support
Founded by Sam Wells and Chris Findlow, with 35+ years' combined experience in commercial finance. You speak to specialists, not a call centre.
Clear process, secure portal
Track your enquiry, review lender offers and exchange documents in one secure portal. No email chains, no spreadsheets, full visibility from enquiry to drawdown.
Free to compare, success-based fees
No upfront charge to use FundingLinks. Fees apply only if you proceed with a facility, and they are agreed in writing before you commit.
Merchant cash advance FAQs
Direct answers to the questions business owners usually ask about merchant cash advances.
What is a merchant cash advance?
A merchant cash advance is a lump sum advanced to a business that takes card payments, repaid automatically as a percentage of each card sale until the agreed total is paid off. There is no fixed monthly payment and no fixed end date. It is also known as a Business Cash Advance, Card Machine Loan or PDQ Funding.
How is a merchant cash advance different from a business loan?
A business loan has fixed monthly payments and a fixed term, with cost expressed as an APR. A merchant cash advance has variable repayments (a percentage of card sales) and no fixed term, with cost expressed as a factor rate. MCAs are faster and more flexible but usually more expensive in total cost. Business loans are usually cheaper but slower to arrange and less flexible.
What is a factor rate?
A factor rate is a fixed multiplier (typically 1.1 to 1.5) that determines the total amount repayable. Borrow £30,000 at a factor rate of 1.25 and you repay £37,500. Unlike an interest rate, a factor rate does not change with the repayment period. If you repay faster you do not save money.
Can I convert a factor rate to an APR?
Roughly, yes, but the equivalent APR is much higher than the factor rate suggests, because APR accounts for the fact that you repay the advance gradually rather than holding the full sum for the whole term. A factor rate of 1.25 repaid over 6 months works out at roughly 50% APR. The same factor rate repaid over 12 months is lower, but still around 45% APR. The shorter the repayment period, the higher the equivalent APR. Always ask the lender to show the total repayable in pounds, not just the factor rate.
How much can I borrow with a merchant cash advance?
Typically between 100% and 200% of your average monthly card turnover. The common range is £3,000 to £300,000, with larger facilities (up to £1m or more) available for established businesses with strong card sales history.
How quickly can I get the funds?
An application is usually approved within 24 to 48 hours. Funds typically land in your bank account within 24 hours of signing the agreement.
What sectors are merchant cash advances best for?
Sectors with high card transaction volume: retail shops, hospitality (restaurants, cafes, hotels), e-commerce, health and beauty (salons, clinics), garages and MOT centres, and trade businesses that take card payments. Pure cash businesses or B2B invoicing businesses are not suitable.
Will I qualify if I have poor credit?
Often yes. MCAs are unsecured and lenders prioritise card sales performance over credit history. Businesses turned down for traditional loans often qualify for MCAs, although the factor rate will reflect the higher risk.
Do I need to provide security or a personal guarantee?
MCAs are unsecured, so no business asset is pledged. Personal guarantees are sometimes required, particularly for higher amounts or weaker credit profiles. Many smaller MCAs do not require a personal guarantee.
Is a merchant cash advance regulated?
Most MCAs to limited companies for business purposes are unregulated, because the product is structured as a sale of future receivables rather than a loan. MCAs to sole traders or ordinary partnerships can fall under FCA consumer credit regulation, so FundingLinks works only with UK limited companies, LLPs and PLCs.
Are merchant cash advance repayments tax deductible?
The cost of finance (the difference between what you borrow and what you repay) is generally treated as a business expense and deductible in the normal way. This is general guidance, not tax or accounting advice. Always speak to a qualified accountant or tax adviser about your specific circumstances.
What happens if my card sales drop?
Repayments drop proportionally. If you take fewer card sales, the lender automatically receives less each day. The total repayable does not change, but it takes longer to repay. This flexibility is one of the main advantages of an MCA over a fixed-payment loan.
Related products
Other funding options that can work alongside, or instead of, a merchant cash advance.
Get an honest merchant cash advance quote
See the factor rate, total repayable and equivalent APR side by side from multiple lenders. No obligation, no impact on credit score.
Written by
Sam Wells
Co-Founder, FundingLinks
Sam Wells co-founded FundingLinks alongside Chris Findlow, after more than 10 years in invoice finance and alternative lending, including senior broker and partnership roles at Kriya. He helps SMEs access competitive funding by matching them with the right lender, product and structure for their stage of growth.
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