Merchant Cash Advance
Acceptance within 24 hours
Quick and easy application
Unrestricted use of funds
Loans from £2500 – £500,000
What is a Merchant Cash Advance?
A Merchant Cash Advance, also known as a PDQ Cash Advance or Business Cash Advance is a quick and easy alternative to a bank loan which secures lending using your business’ card terminal. Repayments are taken from the transactions processed through a PDQ machine (card machine). This type of loan is ideal for businesses that operate seasonally as loan repayments are minimal on months with a low turnover and more substantial on months with a high turnover.
A PDQ cash advance is an unsecured advance of cash, based upon future credit and debit card sales. A pre-agreed percentage of your businesses card transactions are taken to repay the loan, until the confirmed total payback has been met. As payback is directly linked to card takings, you’ll only pay back your advance when your business earns.
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Am I eligible for a Merchant Cash Advance?
Generally speaking, most limited and non-limited companies, including partnerships, are eligible. The main requirement is that they have been taking card payments for at least 4 months through a PDQ terminal.
To qualify for a cash advance, you do not have to be a homeowner and will not have to secure anything against a property. There are no specific sectors that are exempt from this type of loan. Providing you take regular card payments and fulfil the monthly threshold of £2,500, you should qualify.
If you have a CCJ and your personal file has historic bad credit, there are no guarantees that you will qualify for a PDQ Cash Advance. However, due to the flexibility of this loan, CCJs and adverse credit can be considered, and many past cases have been approved with bad credit in place. There is an 85% acceptance rate on this product.
We work with all merchant acquirers. However, some are easier to deal with than others. The lenders we have access to work directly with are FDMS, Elavon, Worldpay and Lloyds Cardnet. If you have an acquirer that is not one of these we can still work with you, but it may be a good idea to think about changing for the future.
How does a Merchant Cash Advance work?
As mentioned, Merchant Cash Advances are loans which are repaid through a business’s transactions via a PDQ machine.
An example of a PDQ Cash Advance:
- The boiler breaks in a hair salon, leaving them with no hot water for the sinks. Without hot water, they can’t wash customers’ hair, meaning they can’t operate properly.
- They set up a Merchant Cash Advance based on their revenue from the previous month.
- They receive funds to repair the boiler immediately, so they can have the salon up and running as quickly as possible.
- Repayments are taken as a percentage of revenue over the next few months.
A PDQ Cash Advance doesn’t have to be used for emergency situations. Due to the loan being unrestricted, you can use the funding to go towards any business expense. Most customers use this for growth; refurbishments, equipment purchase, increasing staff, marketing, etc.
The splits will be taken automatically by setting up an escrow account that will sit alongside your merchant account. Every transaction that is made through the PDQ terminals will be re-directed into the escrow account where the split will be deducted, the rest of the sales will be directed into your merchant account and then onto your bank provider. In most cases there will be a delay time of around 2-3 days.
There is no fixed term on this product, as the loan is directly related to how many sales through the card terminals are made each month. However, all loans are paid back within 12 months. Loans can be arranged same-day if everything is sent back quickly. However, on average, this takes around 5 working days dependent on your acquirer.
What are the benefits of Merchant Cash Advances?
In this type of loan, you don’t have to worry about knowing which date your payment will be taken or whether you have enough in the bank. This is because the repayment is ‘taken at source’, meaning it won’t go into your account in the first place. The lender works with the card terminal provider directly, meaning there’s no middle man (that’s usually you), and the payments are taken automatically until the entire debt is paid.
It’s simple, really; the more you earn, the more you pay back. If you have a super busy Christmas period, you might end up paying a lot of the loan back during this time. In contrast, a quiet period would see you paying less. This means you don’t have to worry as much about whether you’ve got enough to cover the repayments should you come into a quiet spell or experience difficulties out of your control. The repayments on business cash advance loans are proportional and are made as a percentage of your business revenue each month.
Access to other finance options
While it may be difficult to secure more than one regular business loan, having a Merchant Cash Advance doesn’t hinder your ability to have another type of finance at the same time. You can use your PDQ Cash Advance for general cash flow while having a different type of business loan for other vital business needs.
What are the disadvantages of a Merchant Cash Advance?
This type of loan might seem like a win-win situation on paper, but it’s not the most suitable finance option for everyone. If your business deals mostly with cash, invoices or bank transfers, it’s likely that you wouldn’t benefit as much from a PDQ Cash Advance. This is because the repayments are made through card transactions, so it’s most beneficial if this is your business’s most used form of payment.
There is also a limit to the amount you can borrow based on your monthly turnover. You’ll usually be able to borrow the equivalent of your average monthly revenue, but it would be difficult to obtain this kind of loan for a larger sum. This is because it must be paid back via card payments, so if your company isn’t making enough money, you wouldn’t be able to pay it back.
If you need any more details on the PDQ or Business Cash Advance agreements we offer from UK lenders, call us on 01371 870815 or email us at email@example.com. We work with some of the best cash advance companies to get you competitive deals that you can trust.