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.