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MCA – Just Another Acronym? Or The Solution To Your Cash Flow?

Card terminal

We sometimes throw acronyms around like everyone works in finance – which of course you all don’t. So why don’t I explain what an MCA funding facility is – and why it could be exactly what you need to resolve cash flow in your business.

A Merchant Cash Advance (MCA) works by using the business that you are doing via your card terminals or e-commerce to support a loan to your business – and repayments vary according to the level of business that you do – meaning no ‘must make’ payments if business dips.

Since the start of the pandemic so many more transactions are made on card and not cash – which is why so many more people are using the business they are doing in card transactions to fund their cash flow.

Your business can quickly access funds by putting your card transaction account / terminal provider together with the lender so they understand your business income – and repayments are taken at source when you complete card transactions, so there are no repayments to manage from your bank account.

What does this mean in short for your business? You could potentially borrow between 50% and 100% of your monthly card takings (depending on your situation and the numbers involved) as a business loan to support your cash flow for costs and overheads – and such items as stock purchases, suppliers, advertising / marketing and ad hoc or unexpected costs. 

Repayments are then taken as a pre-agreed percentage of your card transactions through your business – so that when you are doing more business you repay more, and when it is quieter your payments are automatically reduced.

Since the start of the pandemic so many more transactions are made on card and not cash – which is why so many more people are using the business they are doing in card transactions to fund their cash flow.

Merchant Cash Advances (MCA) can work for businesses in many different sectors, including:

  • Physical retail
  • Online retailers
  • Marketplace sellers
  • Leisure
  • Health and beauty
  • Hospitality
  • Car servicing / MOT / repairs / parts
  • Travel

Since Covid began the list of businesses that accept card payments has grown far longer – if you take card payments from customers then you could be eligible to access an MCA. 

A Merchant Cash Advance (MCA) does not have to be used as a one off business loan – you can use the facility like a revolving credit facility, which once you have repaid from the natural flow of your business could be used again to ensure smooth cash flow in the business. You then continually have access to the working capital that you need to cover costs and overheads and can take advantage of business opportunities and have the potential to grow.

Getting funded for a Merchant Cash Advance (MCA) is a relatively straightforward and quick process if you are eligible – why not get in touch and discuss your business and card transactions to find out about accessing the cash flow to operate and grow your business – in a way that fits the business that you are actually doing.

mark@essexcommercialfinance.co.uk / 01245 979 100 

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