If you’re a business owner that accepts debit or credit cards, a Merchant Cash Advance may be a source of finance to consider.
The pandemic has given rise to an increase in cashless transactions made in-store and online. According to the Central Bank, the total value of payment transactions increased by 52% which amounted to €7.58 trillion, in 2020. As customer payment preferences continue to shift towards contactless, credit or debit card transactions, business owners should be aware of the financing options available to them.
What is a Merchant Cash Advance?
A Merchant Cash Advance is a flexible financing option that frees up your businesses’ future income and provides funding today. What does that mean exactly? With an advance, the business receives a lump sum which is repaid daily using a percentage of their credit and debit card sales.
A Merchant Cash Advance differs from a Term Loan in 2 main ways:
- A business borrows a lump sum of money and repays it as a percentage of card payment income. The volume of card payments and the amount of money the business makes are what qualify them for an advance
- An advance adapts to a business’ cash flow patterns. As the business grows, they repay faster. During lulls, they repay slower
How are repayments calculated?
With a Merchant Cash Advance, the business receives a lump sum with repayments based on a percentage of their daily credit and debit card sales. Repayments are automated as they are taken at the source, which means the payment is sent directly to Linked Finance by your card terminal provider.
The flexible nature of a Merchant Cash Advance means it adapts to the growth and operating pattern of the business; as the company grows, repayments are faster, during lulls, payments are slower.
What can an advance be used for?
An advance can be used for a wide range of reasons to help a business grow, including:
regular cash flow
purchase of stock
increasing staff count
office expansion
digital upgrades
purchase of equipment
What are the benefits of a Merchant Cash Advance?
In addition to the flexible and unique repayment nature, a Merchant Cash Advance has various other benefits for a business owner which should be considered;
Flexible and scalable
Get a decision within 24-hours. An advance is short-term financing that helps your
business without leaving you short on cash.
Quickly boost cash flow
Get a decision within 24-hours. An advance is short-term financing that helps your
business without leaving you short on cash.
Minimal time and effort
Daily repayments are made automatically. No remittance, no monthly transfers, so you can concentrate on running your business.
Hassle-free repayments
Never worry about missed repayments. Repayments are taken ‘at source’ which means they come out of your card sales before they go into your bank account.
What type of business does a Merchant Cash Advance suit?
An advance may suit a wide range of businesses that accept credit or debit cards as a form of payment for their goods or services, including:
- Restaurants and takeaways
- Ecommerce/online businesses
- Retail stores
- Pubs and bars
- Hotels
- Hairdressers and beauty salons
- Gyms
- Transport i.e. couriers
Seeing Linked Finance adding the Merchant Cash Advance product to their existing offering is excellent for businesses throughout Ireland. For Simplí Business Finance, we now have a lender offering more funding solutions under one roof to present to our clients.
Adding Merchant Cash Advance to their offering supports the growing trend of cashless transactions from my clients’ end customers while reducing the headaches of balancing repayments. We are excited for the team at Linked Finance and looking forward to delivering more of their solutions to our clients.
Gary Grimes, Managing Director, Simplí Business Finance
Businesses have several financing options to help fund their growth. A Merchant Cash Advance is one of those options. An alternative funding option to a Term Loan, a Merchant Cash Advance best suits businesses that receive consistent credit or debit card payments.
An advance is also ideal for a business that needs funding promptly. Not all business expenses can wait for a lengthy loan application process with a traditional bank. With a credit decision in 24 hours and a fast drawdown, a Merchant Cash Advance from Linked Finance is a short-term financing option that may work for business owners.
