What is a merchant cash advance? How card-takings finance works
By SendPay Business · · 2 min read
- 1Your card appears in your app
- 2Tap it to pay in a shop
- 3See every payment as it happens
A merchant cash advance (MCA) gives a business a lump sum now in exchange for a share of its future card sales. Instead of fixed monthly repayments, a set percentage of each day's card takings goes to the provider until the agreed amount is paid back.
How it works
- The provider looks at your past card sales to decide how much to offer.
- You agree an advance and a total repayment amount.
- A fixed percentage of each card sale goes to the provider.
- Repayments rise on busy days and fall on quiet ones, until the total is paid.
The factor rate
MCAs are usually priced with a factor rate rather than an interest rate. A £10,000 advance at a factor rate of 1.3 means repaying £13,000. If sales are strong and you repay quickly, the effective annual cost can be very high, so work it out before signing.
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Pros and cons
MCAs can be quick to get and flex with sales, which suits seasonal businesses. But they often cost more than a bank loan, and they usually aren't regulated as consumer credit, so there are fewer protections.
Where SendPay fits
SendPay doesn't offer lending or cash advances. SendPay platforms let your customers take payments by payment link, invoice and online store under your own brand, powered by licensed partners.
How it works
Your own money app- 1Name it and pick your colours
- 2Choose what it does
- 3Launch when you are ready
Why sign up
Create your free SendPay account
It's all about creating your own financial platform with ease. Start with a free account today.
- 🪪A free business accountOpen it in about a minute with your business name, email, password and mobile. No card and no documents to start.
- 💳Get paid from day oneTake card payments, and share your own payment link and invoices so customers pay in a click.
- 🌐A free business websiteFree to build, free to publish and free to keep, with unlimited visits.
- 🚀Your own financial platformDesign and preview your whole platform free, then launch when you are ready.
SendPay Business is a technology company, not a bank. Accounts, cards and payments are powered by licensed partners.
Questions people ask
How do I work out what an advance will cost me?
Enter the advance, factor rate, holdback and your card takings, and the free calculator shows the total repaid, how long it takes and the yearly rate it works out to.
Merchant cash advance calculator →Read next
Spotted a mistake or something out of date? and we'll fix it. How our guides are made
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.