Merchant Cash Advance Loans A merchant cash advance, or merchant loan: fast funds, repaid a little from every card sale.
A lump sum now, repaid from a share of your future card sales. For businesses that need liquidity fast and may not qualify for a traditional business loan.
Repaid from card sales · Minimal paperwork · Based in Bella Vista, NSW
Why choose us?
A merchant cash advance is a type of business finance that provides a lump sum in exchange for a percentage of your future card transactions. Rather than an interest rate, the lender works out a total amount owing using a multiplier-based formula, so you know the full cost up front.
Greenline Home Loans suggests an advance for business owners who need liquidity and cannot demonstrate a strong credit history, or have not been trading long enough to qualify for other types of business loans. As your broker, we take the time to listen and understand you, guide you through the whole process, and give you all the time you need to understand each step.
What sets it apart
Merchant cash advances have become a popular alternative to traditional loan products for businesses that take card payments. These are the features that set them apart.
Simplicity and speed
Applying is simple and needs far less paperwork than a traditional business loan. Like an unsecured business loan, funds can be available quickly.
Easier to qualify
Lenders look at your business's card takings to decide whether the advance can be repaid, so credit checks and financial history carry less weight than with a bank loan. You do not need a perfect credit score.
Secured by your sales
The advance is secured by, and repaid from, your future card transactions. Usually no other collateral is required, although some providers ask for a director's guarantee.
Flexible repayments
Repayments are not a fixed amount: the lender takes a percentage of each card sale, so you pay back more when sales are strong and less when they are slow.
How a merchant cash advance works
The provider advances a lump sum and, in return, takes a fixed percentage of your card takings each day, the holdback, until a set total has been repaid. The total is worked out with a multiplier, the factor rate, applied to the advance, rather than an interest rate, so you know the full amount owing from the start. Because repayments are a share of sales, you repay more in a good week and less in a slow one, and the term stretches or shrinks with your takings.
What it costs
A merchant advance is generally the simplest business finance to obtain, and also one of the most expensive. The factor rate sets the total you repay; converted into an annual interest rate, the cost is usually far higher than a secured loan or an overdraft, and the faster you repay, the higher the effective rate. It makes sense for a short-term need that pays for itself, stock for a busy period or a repair that keeps you trading, and not for long-term borrowing. Your broker shows you the total cost beside the alternatives before you decide.
When it makes sense, and the alternatives
It suits businesses with steady card sales that need money within days and cannot yet show the trading history or credit record a bank wants. If you invoice other businesses, invoice financing is usually cheaper; if the need recurs, a business line of credit or an overdraft costs less; and for an established business an unsecured small business loan may be approved just as quickly. See how the finance process works.
Frequently asked questions
What is a merchant cash advance?
Business finance that provides a lump sum in exchange for a percentage of your future card sales. Most are structured as a purchase of your future card receivables rather than a loan with an interest rate: the total you repay is set by a factor rate applied to the advance, and it is repaid automatically as a share of each day's card takings.
How does a merchant cash advance work?
The provider assesses your card sales, advances a lump sum and sets a total repayment using a factor rate. From then on a fixed percentage of your daily card takings goes to the provider until the total is repaid, so repayments rise and fall with your sales.
How much does a merchant cash advance cost?
The factor rate sets the total you repay, and converted to an annual rate the cost is usually much higher than a secured loan, an overdraft or invoice financing, especially if you repay quickly. The exact rate depends on the provider and your sales. Compare the total cost with the alternatives before you commit.
Who qualifies for a merchant cash advance?
Businesses with steady card sales. Providers look mainly at your takings, so they may place less weight on your credit file or years of trading than a bank would. Businesses that are new or have had credit problems may qualify where a bank's criteria are not met.
What is the difference between a merchant cash advance and a business loan?
A loan has an interest rate, a set term and fixed repayments. An advance has a factor rate, no set term and repayments that are a percentage of sales, and it is secured by your future card transactions rather than an asset. It is faster to get and more expensive.
How fast can I get a merchant cash advance?
Often within days. The application needs minimal paperwork, usually your card sales statements and bank statements, and providers move quickly. Timing depends on the provider.
Do I need security for a merchant cash advance?
No separate collateral is usually required: the advance is secured by, and repaid from, your future card transactions, so you do not pledge property or equipment, although some providers ask for a director's guarantee.
Is a merchant cash advance a loan?
Usually not in form. Most are structured as a purchase of your future card receivables rather than a loan with an interest rate and a term, which is why the cost is expressed as a factor rate; some providers write them as loans repaid by daily debits. Read the agreement for what the provider can do if sales fall or stop, and compare the total cost with a loan before you sign.
Can I repay a merchant cash advance early and save?
Usually not. The total you repay is fixed by the factor rate when the advance is made, so repaying faster rarely reduces it; it only shortens the term and raises the effective annual cost. A loan with interest charged on the balance is the structure that rewards early repayment.
Can a sole trader get a merchant cash advance?
Yes, if the business takes regular card payments and has been trading long enough to show them: providers assess the card takings rather than the business structure, and sole traders with an ABN are commonly funded.
Do you need a merchant cash advance?
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