Is a Merchant Cash Advance Right For Your Business?

Running a business means managing day-to-day operations while planning for growth. Whether you’re navigating seasonal dips, investing in stock, upgrading equipment or covering unexpected expenses, access to fast and flexible funding can make a real difference.

A Merchant Cash Advance (MCA) is designed for businesses that accept card payments and want repayments that reflect real-time performance. Rather than fixed monthly instalments, you repay as you earn through an agreed percentage of your future card sales.

At Portman, we specialise in structuring funding solutions that work around your cash flow, not against it.

What is a Merchant Cash Advance?

A Merchant Cash Advance is a form of revenue-based finance. Your business receives a lump sum upfront and repays it through a fixed percentage of future debit and credit card transactions.

Unlike a traditional loan:

• There are no fixed monthly repayments
• There is no fixed term
• Repayments adjust in line with your sales
• The total cost is agreed upfront using a factor rate
• No hard collateral is typically required

Since it’s not a conventional loan, you are effectively accessing capital based on your future card revenue rather than borrowing against assets. This structure makes MCAs particularly popular with retailers, hospitality businesses, and service providers with variable or seasonal income.

How does an MCA work?

Here’s a typical step-by-step process:

1. Application

You provide key information about your business, including the most recent three months’ bank statements and evidence of card turnover. At Portman, we require at least 3-6 months of trading history and a minimum of £5,000 in monthly card sales.

2. Offer and Approval

The advance amount is typically based on your average monthly card sales. A factor rate is agreed upfront, which determines the total repayment amount.

3. Funding

Once accepted, funds are often released within 24-48 hours.

4. Repayment

Repayments are collected automatically from your card sales. If sales increase, you repay faster. If sales slow down, repayments reduce proportionally.

A recent example

Elliott Paul, Executive Finance Broker at Portman recently helped a retail business secure £75,000 to support cash flow during a quieter trading period.

• Advance: £75,000
• Total repayment: £89,811
• Repayment percentage: 11.5% of card sales

Elliott explains: “This business received four different offers but ultimately prioritised the percentage of card sales being taken. They were comfortable borrowing slightly less in exchange for a lower percentage deduction. That’s the flexibility an MCA can provide as it allows you to structure funding around your business goals”

This structure allowed the business to stabilise cash flow while keeping repayments manageable.

Common uses for an MCA

An MCA can be used for almost any legitimate business purpose, including:

• Purchasing stock or seasonal inventory
• Equipment upgrades or urgent repairs
• Refurbishments and renovations
• Marketing campaigns
• Hiring staff
• Expansion or opening new locations
• Bridging short-term cash flow gaps
• Covering unexpected expenses

Because repayments are aligned with revenue, MCAs are particularly effective when funding initiatives are expected to generate additional income.

Benefits of an MCA for SMEs

1. Flexible Repayments

Payments adjust in line with your card turnover, reducing strain during quieter periods and allowing faster repayment during busier months.

2. Fast Access to Capital

Applications are streamlined and funding can often be secured within days.

3. Unsecured Funding

MCAs do not usually require property or physical assets as security.

4. Accessible for Growing Businesses

Approval is largely based on card performance rather than credit score alone, making it accessible for businesses that may not qualify for traditional bank lending.

5. No Fixed Term

There is no rigid repayment deadline you repay as you trade.

Elliott also highlights another benefit: “Once you’re around 60% through repayment, lenders may offer a top-up. This can give you another boost of cash flow while maintaining the same structure. It’s simpler, and lenders often feel more comfortable offering additional funding once they’ve seen your repayment history.”

Considerations before applying:

While MCAs offer speed and flexibility, it’s important to understand the structure:

• The total cost is fixed upfront and does not reduce with early repayment
• Factor rates can make MCAs more expensive than traditional loans
• Repayments are made with each card transaction, so you will be operating on slightly reduced daily revenue
• Agreements should always be reviewed carefully to understand all terms

An MCA is most effective when used strategically, with a clear plan for how the funds will support growth or stabilise cash flow.

Is an MCA right for my business?

Merchant Cash Advances are particularly suited to:

• Retailers and convenience stores
• Restaurants, cafés, pubs and hospitality venues
• E-commerce businesses
• Salons and service providers
• Seasonal or high-volume card-processing businesses

If your business has strong card turnover but fluctuating income, an MCA can provide working capital without the strain of fixed monthly repayments.

However, choosing the right structure is essential.

Elliott adds: “An MCA may not always be the most suitable option. There are other loan products available, and taking an MCA won’t necessarily limit your ability to access other funding in the future or funding alongside it. The key is choosing what fits your business best, which is where working with an expert is crucial, matching your structure and goals with appropriate available products.”

Is my business eligible?

To qualify for a Merchant Cash Advance, most lenders look for:

• At least 3 months of trading history (ideal for newer businesses)
• Minimum £5,000 in monthly card sales
• Card payments processed online or in-store
• 3-12 months of bank statements
• Latest management accounts for applications over £100,000
• Personal Guarantee (PG) required
• All company types considered
• Homeownership not essential

Merchant Cash Advance Vs Business Loan

Choosing the right funding solution depends on how your business operates. Both options offer access to funding, but they’re structured differently to support different business needs.

A business loan offers certainty, with fixed repayments and a structured term that supports long-term planning.

A merchant cash advance offers adaptability. Because repayments are linked to card sales, they fluctuate with your income. With no fixed monthly instalments and no set term, it provides greater day-to-day flexibility.

As Elliott summarises: “Both solutions can work well – the right choice depends on how your business generates revenue and how much flexibility you need.”

How Portman Can Help

At Portman, we take the time to understand your business before recommending a funding solution.

Our process includes:

• Assessing your card turnover and funding requirements
• Providing clear, no-obligation quotes
• Explaining factor rates and repayment structures in plain terms
• Exploring alternative finance options if an MCA is not suitable
• Supporting you throughout the funding journey

We focus on delivering funding that supports sustainable growth – not short-term strain.

Whether you’re exploring a Merchant Cash Advance or considering alternative finance options, our team will provide clear guidance, transparent terms and access to a wide range of lenders to secure a solution aligned with your commercial objectives.

Written by Tsungai Mutyavaviri

Marketing & Design Executive