What is Merchant Card Advance?

Many business will take card payments for their products and if so have you heard of merchant card advance? This is a really flexible way to get extra cash into your business, that has flexible repayments in line with your takings.

What fees are involved?

With Merchant Card Advances the only fee is the factor rate – this is a really simple way of understanding how much the facility will cost you.

For example if you borrow £100k with a factor rate of 1.10 then the total you would pay back is £110k in total.

How much will my repayments be?

Your repayments will vary depending on your business takings. The repayments will be based on your takings and will be a fixed percentage. For example you might have a repayment structure at 15% this means that 15% of your takings are taken automatically to repay the facility. This is great for seasonal businesses as when your takings increase you pay more back and when your trading decreased you pay less back.

graph with two lines showing card takings and the respective repayment for merchant card advances for website J&J Commercial Finance

What information is needed to apply for a merchant card advance?

The following documentation is generally needed as a rule of thumb – some lenders might ask for additional information

  • Last 12 month card takings – statements from merchant provider
    • If trading for between 6 – 12 months then full statements for that period
  • Last 3 months business bank statements

What happens if I’ve just reopened following Covid-19?

As I’m writing this there is no need to worry if you have just reopened all that we would need to see is a couple of weeks of trading activity to confirm that the business has reopened – also don’t worry about the reduced taking during Covid-19 a lot of our lenders understand this and will ignore this period of trading.

How much can I borrow?

Your borrowing limit is based on an average of your monthly card takings (with some lender excluding the lock down period). If you monthly takings are £50k for example then you can generally borrow between 100% – 125% of that amount. The minimum average card taking needs to be £3,500 albeit some lenders have temporary changed their criteria due to lock down.

This product can also work alongside other lending products including government schemes such as CBILs and BBL

How do I apply?

Applying is simple just book an appointment with us and we will guide you through the whole process ensuring the application is right for your business needs.

Silhouette image of works on scaffolding for website J&J Commercial Finance

Construction Finance

Construction Finance is a specialist area of commercial finance designed for contractors and subcontractors who provide their services under  a contract, framework agreement or Purchase order. It can help to provide a cash advance against the value of invoices raised on completion or part completion for staged contracts on working being carried out.

We know that the construction industry faces a unique set of challenges and cash flow issues due to the cost of material and extended and unpredictable payment cycles.

Construction Finance a quick overview

Timely Access to working Capital – Funding can be advanced against un-certified application for payment or staged invoices usually within 24hrs once the facility is in place.

It can help to bridge the gap and release funding into the business quicker rather than having to wait for terms of payment

Construction finance can help companies to keep building, hire equipment, pay for materials and pay wage bills

How much does Construction Finance Cost?

Lenders will look at the company and individuals to create a funding package specific to their needs. All lenders should be fully disclosing their fees for the facility upfront highlight interest rate charges, facility, arrangement and exit fees. As your broker we will work with the lender and our clients to ensure these are fully understood and also work to get the best deal possible for our clients.

There is normally a

  • Service charge – this is generally based on the turnover of the business and set as a percentage
  • Discount charge – this is similar to an interest charge for borrowing the funds between funds being drawn and the invoices being paid. This can generally be a percentage over base rate
  • Annual Fee – this is a percentage fee based on the facility level

The cost of the facility will mainly depend on the size if your business, the nature of trade and the number of invoices

Bad Debt Protection

Bad Debt protection is an insurance that be put in place to support the supply chain should a customer fail to pay an invoice or becomes insolvent. This means that the insurance policy will either aid with the credit control and collection of the debt and in the worst case scenario pay out a percentage of the invoice that can no longer be paid.


To find out how we can help your business with Construction Finance book your free appointment now

image of pressure valves for website J&J Commercial Finance

What is Asset Finance?

In its simplest terms Asset Finance is a type of secured finance where the lender will take a security interest in an asset. It’s changed a lot since the days where it just used to be machinery, cars, yellow goods (JCBs etc..) and now covers a broader range of assets. It generally still covers business critical assets for example a fleet of lorries for a logistic company or a coffee machine for a café. This broad range means that asset finance is accessible to businesses across different sectors.

The different variations of Asset Finance

There are many different permutations of asset finance and structuring a deal can be very bespoke to the individual, business and asset type. In summary

  • Hire Purchase – This is where you spread the cost of the asset over a period of time. The asset appears on your balance sheet and because you own the asset you are responsible for maintenance and associated costs. At the end of the term you will have full ownership of the asset
  • Equipment Leasing – This is where the lender owns the asset and rents it back to you. At the end of the lease period you can either continue to lease, upgrade to a new piece of equipment or hand it back
  • Other forms include – Finance Lease, Operating Lease, Lease purchase, Contact Hire, Refinance.

Is Asset Finance available to me?

From new start up business to established business Asset Finance is an option available when purchasing new assets into the business. The types of assets are so varied it could be catering equipment, Vehicles, Lorries, Printers, Manufacturing, Construction, as well as Medical and Dental equipment, Gym Equipment, Shop fittings, IT etc…. the list can be endless.

Asset Finance is available to Sole Traders, Limited Companies, Partnerships, Individuals

The asset also doesn’t have to be a new, it can be second hand and we can work with you and the supply to ensure a smooth process. Due diligence will be undertaken to make sure that there is no outstanding finance on the asset before ownership is changed.

How much does Asset Finance cost?

With the various lenders and options available this is a really difficult question to answer and is where J&J Commercial Finance can help. We can guide you through the process from looking at what deposits are available ( a number will now do 0% deposit), through to VAT deferment, Seasonal payment options and what you want to do at the end of the term with the Asset. We can pull together a no obligation quote and explore the options with you, as well as looking at other finance options giving you piece of mind that you are making the decisions for your business.

To book a free review visit our appointment page

image of invoices for website J&J Commercial Finance

What is Invoice Finance?

Invoice Finance is a way for a business to borrow money against its outstanding invoices. When you issue an invoice you may have to wait anything up to 120 days (depending on your terms) until your client pays. Invoice Financing enables you to get access to the those funds within days so you no longer have to wait until your client pays you. A lender will typically give anything between 60% – 85% of the invoice on Day 1, this varies depending on the debtor book, sector and type of business, sometimes higher amounts can be given by using additional schemes available to UK Businesses.

What are the different invoice finance products?

There are broadly three different types of invoice finance available to businesses

  1. Invoice Discounting – this is probably the most straightforward type of invoice financing. The business is still hands on with its invoices and will run it own credit control.
  2. Invoice Factoring – With this product the lender is more closely involved in the transaction. The lender will generally handle the collection of invoices from your clients and act as your credit controller. They will then collect the debt and make the remaining funds available to the business.
  3. Selective/Spot Invoice financing – This product enables you to select the invoices that you want financing rather than the ones above that look at all of your invoices.

Conditional/Disclosed facilities  – If a facility is confidential then everything the client will receive will look like its coming from the business that it owes the invoices to, with a disclosed facility the client will receive communication and branding from the lender who holds the invoice finance facility.

What sectors can use Invoice Finance?

Invoice Financing is available to a number of sectors with some lenders specialising in certain sectors.

Exports Wholesale
Haulage & Logistics Construction
Recruitment Manufacturing
Textiles & Fashion Professional Services

What are the advantages?

With the advances in technology and the rise in cloud based accountancy software this is dramatically increasing the speed at which businesses can access their funds. Depending on the lender this could be anything up to 48 hours of invoices being issued (if not quicker), so its number one advantage is that is speeds access to funds so your not having to wait until the end of of your terms of business to receive the funds.

Another advantage is that you are using assets within the business to help raise finance rather than taking on additional debt such as a business loan. Whilst a business loan may also be able to support a business there are a number of lending products available to business owners each with there own advantages and disadvantages.

Invoice finance can be used for startup businesses so if you only have a relatively short trading history you may be able to start to receive an advance on your invoices. The lender will generally look for a history on how you have been collecting invoices and want to see a few examples of invoices raised, terms being issued and the collection of those invoices.

How much does Invoice Financing cost?

With so many lenders now offering invoice finance to their clients the cost varies from lender to lender. The key things to look at are

  • The advance amount – how much will lender advance you on day 1?
  • Service Fee – This will cover aspects such as management of invoices, collections, administration and is typically charged at a percentage of the companies turnover
  • Discount fee – This is the cost of borrowing the money – so when you draw down the funds you will be charged a percentage fee, the longer the invoice is outstanding the more the fee will be as it acts similar to the interest rate on an overdraft or loan – but not has high!

Bad Debt Protection

So what happens if your invoices can not be collected or the businesses within your supply chain cease trading? This is where Bad Debt Protection can come in. This is a type of insurance that will cover you should businesses within your supply chain cease trading, often if they enter liquidation or if your debtors default on the invoice. The insurance will provide cover against the outstanding invoices so that your business still receives some of the invoice due.

Find out more about invoice financing or bad debt protection and how it support your business by booking your free consultation

compass picture with title whats the difference between CBILS and BBL? for website J&J Commercial Finance

What’s the Difference Between CBILs and BBL?

The Coronavirus Business Interruption loan scheme (CBILs) and Bounce Back Loan (BBL) are both designed to help SME businesses throughout the Covid-19 situation. They are very two different schemes and its important the business owners understand the difference in the scheme as you can only access one scheme.

Whilst you can convert a CBILs (under £50k) into a BBL you cannot increase the amount of lending once you have applied or apply for an additional loan through either of the schemes.

CBILS currently has over 60 accredited lenders, covering a range of products, the new BBL currently has 14 accredited lenders but new ones are being added all the time. Just like CBILS that started out at 40. If your lender is not part of the scheme then don’t worry contact us to help find a suitable lender

What’s common between the schemes?

Both schemes offer

  • No Guarantee fee for the business to pay
  • The Government will make a business interruption payment to cover the first 12 months interest

That’s where the similarities stop….

So what the main differences between the schemes?

Guarantee (Government to Lender) Partial guarantee 80% Full 100% guarantee
Types of facility available Term Loans, Overdraft, Invoice Finance, Asset Finance Term loan only
Maximum Lending amount £5mil £50,000*
Minimum Lending amount £50,001 £2,000*
Interest rate and fees Set by the lender and dependant on the individual case 2.5% fixed per annum

No fees

Repayment Term six years for term loan and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years. six years – but no additional fees for early repayment
Refinancing Available for a maximum of 20% of the facility No restrictions
Personal Guarantees No PG’s for facility below £250,000 No PG’s

*Bounce Back loans are limited to 25% of your annual turnover for 2019 if trading or projected income if trading for less than a year.

Further FAQ’s can be found on the British Business Banks website

Should I apply for CBILS or BBL?

The first thing to do is to review your cash flow forecast and understand what your business needs (if anything) during this time. Base it on a scenario that there is no or reduced sales for the next 6 months. Then also check the support being offered by the government such as furlough schemes, grants, VAT deferral etc.. and input these into the cash flow model. You can find out more about the schemes available for your business by using the governments support finder tool.

This will then give you an indication of how much additional funding you need for your business over the coming months.

CBILS is too slow should I just apply for a BBL?

CBILS has been slow to launch with the mainstream banks but with a number of new lenders becoming accredited the process for CBILS is improving and the speed of decisions also improving. Whilst BBL was designed to be quick and for amounts below £50k is the route available, businesses however shouldn’t be lowering their amount and applying for the £50k when they realistically needs more. Once you have applied for a BBL you can not amend the amount or take out an additional BBL or CBILS so its important to understand what your business needs and apply for that amount.

How can J&J Commercial Finance help?

As we work with a number of accredited lenders we can help business in a number of ways. With our clients we go through a 3 stage process

3 stage process flow for business support for website J&J Commercial Finance


Click here to book your free business finance review