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Business loansLast updated: 05 Aug 2026
grow your business with flexible finance tailored to your sales
Merchant cash advance
A merchant cash advance is a type of business funding where a lender gives you a lump sum in exchange for a fixed share of your future card sales, repaid automatically as a percentage of each transaction rather than in fixed monthly instalments.
Why get a merchant cash advance with Capitalise?
200,000+ UK businesses trust us
Business credit data powered by Experian
£2bn in funding approved
FCA regulated since 2016
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What is a merchant cash advance and how does it work?
A merchant cash advance works by a funder advancing you cash today in return for an agreed share of your card sales until the advance, plus a fee, is repaid in full. It is built specifically for businesses that take a large proportion of their revenue through card payments.
Rather than paying interest, merchant cash advance providers charge a factor rate, a fixed multiplier applied to the amount you borrow. Your provider takes an agreed percentage of each day's card sales, sometimes called a holdback or retrieval rate, and this is usually set between 10% and 25%. Because repayments move with your card takings, you pay back more on strong sales days and less when trade is quiet.
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How do repayments work on a merchant cash advance?
Repayments on a merchant cash advance are taken automatically as a set percentage of your daily card sales, so the amount you pay back changes in line with how much you take that day. On a quiet trading day you repay less, and on a busy day you repay more, until the full advance and fee has been cleared.
There is no fixed end date. If your sales dip for a few weeks, your repayment term simply extends rather than putting you in default, which is one of the main reasons seasonal and sales led businesses choose this type of funding over a fixed term loan.
Most providers work with your existing card machine and payment processor, so switching to a merchant cash advance rarely means changing how you take payments day to day.
Why choose a merchant cash advance for your business?
Keep your cash flow steady
Repayments track your daily card sales, so they flex with your trading pattern instead of demanding the same fixed amount whether business is busy or slow.
Get funded quickly
Approval is based on your card sales history rather than your credit score or available collateral, so the process is quick and needs minimal paperwork. Funds can land in your account within 48 hours.
Spend it on whatever your business needs
There are no restrictions on what you use a merchant cash advance for, whether that is stock, marketing, equipment, or plugging a short term cash flow gap.
No fixed repayment date
Because you repay a percentage of sales rather than a fixed instalment, a slower trading period extends your term instead of putting you at risk of missing a payment.
Merchant cash advance vs business loan: what is the difference?
A merchant cash advance is repaid as a share of your card sales and priced with a factor rate, while a business loan is repaid in fixed instalments and priced with an interest rate or APR. The table below breaks down the main differences a cash advance and a business loan.
Merchant cash advance | Business loan | |
|---|---|---|
How it is repaid | Percentage of daily card sales | Fixed weekly or monthly instalment |
How it is priced | Factor rate applied to the amount borrowed | Interest rate or APR |
Regulation | Typically not regulated by the FCA | Regulated when lent to sole traders and some partnerships |
Speed to fund | Often within 48 hours | Typically 48 hours to a few weeks, depending on loan size |
Best suited to | Businesses with strong, regular card sales | Businesses that want a predictable, fixed repayment |
Security | Usually unsecured | Can be secured or unsecured |
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Is a merchant cash advance right for my business?
A merchant cash advance works best for businesses that take a large share of revenue through card payments and want funding that flexes with sales rather than a fixed monthly commitment. It is a strong fit for businesses with seasonal or fluctuating card sales, or those that need fast capital to act on an opportunity including:
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Am I eligible for a merchant cash advance?
To be eligible for a merchant cash advance, most lenders on our panel will expect your business to:
There is no minimum credit score requirement in the way there is for a standard business loan, since lenders are underwriting your card sales rather than your credit history. If your business meets the criteria above, you can apply for a merchant cash advance through Capitalise and compare offers from our panel of 130+ lenders in one place.
How to apply for a merchant cash advance with Capitalise
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Share your business details
Tell us about your business, including turnover, how much you want to borrow, and what it is for.
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We match you with suitable lenders
We match you with lenders on our panel that offer merchant cash advances suited to your card sales and funding needs.
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Get support from a funding specialist
A dedicated funding specialist supports you through the process and helps you compare offers.
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Your application goes to multiple lenders
Your application goes to multiple lenders at once, who review it and decide whether to make an offer.
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Accept an offer and get funded
Once you accept an offer, funds are typically paid into your account within 48 hours.
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Repay automatically from your card sales
Repayments are taken automatically as an agreed percentage of your card sales until the advance is cleared.
What are the advantages and disadvantages of a merchant cash advance?
Advantages
Disadvantages
How much does a merchant cash advance cost?
A merchant cash advance is priced using a factor rate rather than an interest rate or APR. The factor rate is a fixed multiplier applied to the amount you borrow to calculate your total repayment, agreed upfront and fixed for the term of the advance. For example, borrowing £10,000 at a factor rate of 1.2 means you repay £12,000 in total, regardless of how long it takes. Factor rates on our panel typically range from 1.10 to 1.35. Where you land in that range depends on your business's trading history, revenue, profitability and business credit score.
Amount borrowed | Factor rate | Total repayment | Approximate cost |
|---|---|---|---|
£10,000 | 1.10 | £11,000 | £1,000 |
£10,000 | 1.20 | £12,000 | £2,000 |
£25,000 | 1.15 | £28,750 | £3,750 |
£25,000 | 1.30 | £32,500 | £7,500 |
£50,000 | 1.20 | £60,000 | £10,000 |
If you want to check a factor rate quote against a fixed term loan, our loan calculator lets you enter an amount, term and interest rate to see the equivalent cost, so you can compare it directly with any factor rate a provider offers you.
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APPLY TODAY
Get a merchant cash advance based on your card sales
Compare merchant cash advance offers from our panel of 130+ lenders in one application, with a dedicated funding specialist guiding you through every step.
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