A merchant cash advance (MCA) is a financing option that provides quick access to cash for small businesses. Rather than a loan, it's an advance payment against your business's future income. The provider will give you a lump sum, which is then repaid automatically using a percentage of your daily credit card receipts. It's ideal for businesses with less-than-perfect credit or those that need immediate access to cash.
Here's what a merchant cash advance typically looks like:
Borrow from $2,000 - $2,000,000Loan terms from 3 months to 5 yearsWeekly, fortnightly or monthly repaymentsFixed interest rates from 7.99%Interest rate tailored to your situationA merchant cash advance can be used for various business needs such as purchasing inventory, upgrading equipment, or covering unexpected expenses. It's a useful tool when your business needs quick access to cash flow. However, due to the high cost of this type of funding, it's best used for short-term financing needs that can generate a quick return on investment.
Here are some common reasons people take out a merchant cash advance:
Merchant cash advances are commonly used to boost working capital for day-to-day business expenses, such as inventory purchases, payroll, and rent.
Businesses often utilise merchant cash advances to fund the purchase of new equipment or upgrade existing equipment.
Merchant cash advances can be used to invest in marketing campaigns, advertising initiatives, and promotional activities to attract more customers and increase sales.
Entrepreneurs may use merchant cash advances to renovate their existing business space or expand into new locations.
Merchant cash advances can help businesses optimise their inventory by purchasing additional stock or taking advantage of bulk discounts.
Some business owners choose to consolidate their existing debts by using a merchant cash advance, simplifying their repayment process and potentially lowering overall interest costs.
Merchant cash advances can fund investments in new technologies, software systems, or online platforms to enhance business operations and improve efficiency.
Businesses experiencing temporary cash flow gaps or seasonal fluctuations can use merchant cash advances to bridge the gap and maintain operations.
Merchant cash advances can provide quick access to funds for unexpected expenses, such as equipment breakdowns, repairs, or unforeseen business costs.
Entrepreneurs may seize growth opportunities, such as acquiring a competitor or launching a new product line, by utilising a merchant cash advance for the necessary capital.
Calculate your repayment estimates and more.
When it comes to a merchant cash advance in Australia, the amount you can borrow will depend on various factors, including your business's sales volume, credit card transactions, and financial stability. A merchant cash advance is a financing option where a lender provides you with a lump sum payment in exchange for a percentage of your future credit card sales. Typically, lenders in Australia offer merchant cash advances ranging from $5,000 to $300,000, although the actual loan amount can vary based on your business's specific circumstances. The loan amount is usually determined by your average monthly credit card sales, with lenders typically advancing a percentage of your monthly revenue.
Unlike traditional loans, merchant cash advances are not subject to fixed repayment terms. Instead, repayments are made through an agreed-upon percentage of your daily or weekly credit card sales, known as the holdback or retrieval rate. The repayment amount will fluctuate based on your business's sales, meaning that during slower periods, the repayment amount will be lower, while during busier periods, it will be higher. It's important to note that merchant cash advances typically come with higher costs compared to traditional loans, as they carry fees and a factor rate instead of an interest rate. The factor rate is a fixed amount that is applied to the borrowed amount to determine the total repayment amount.
To estimate your monthly repayments and the total cost of the loan, input the loan amount, loan term and interest rate into the calculator below. This helps you plan your budget and choose the most suitable loan terms.
Lenders consider several factors when assessing your eligibility, including your credit score, income, debt-to-income ratio, age, residency, and required documentation. While meeting the eligibility criteria doesn't guarantee loan approval, having a good credit score, stable income, and a positive financial profile significantly improve your chances.
You are eligible to apply for a merchant cash advance if you are:
Over the age of 18; andAn Australian citizen or permanent resident; andHave a regular source of income, that is enough to meet the repaymentsApplying for a merchant cash advance is easy and only takes a few minutes. Get started by filling out some basic information into our application form. We’ll review your information, and someone will be in contact with you to discuss the best option for you from over 40+ Australian lenders.
If you’re eligible for a merchant cash advance, and you are happy with the initial quote, you will need to prepare documents such as:
Passport or drivers licenceProof of income and expenses (e.g. payslips, bank statements)Details of any current debts or other loansCompare over 40+ lenders with one application.
When searching for a merchant cash advance, it's essential to understand the different factors to find the best fit for your needs. From interest rates and fees to loan terms and early payout options, each factor can increase or descrease the total amount you will repay.
When it comes to obtaining a merchant cash advance, one of the most critical factors to consider is the interest rate. The interest rate directly impacts the cost of borrowing and your monthly repayment amount. It is essential to compare interest rates from different lenders to ensure you secure a competitive rate that aligns with your financial goals and helps you save on interest expenses over the loan term. Keep in mind that interest rates can vary based on factors such as your creditworthiness, the type of loan, and the lender's assessment of risk.
In addition to the interest rate, carefully evaluating the fees associated with merchant cash advance is crucial. These fees may include application fees, origination fees, processing fees, and ongoing maintenance fees. By understanding the fee structure of different lenders, you can choose a loan with transparent and reasonable fees. It's important to consider both the interest rate and fees to determine the overall cost of the loan and ensure you minimize costs throughout the loan term.
When comparing merchant cash advance options, looking beyond the interest rate alone is essential. The comparison rate provides a more comprehensive understanding of the true cost of the loan. It takes into account both the interest rate and any additional fees associated with the loan, providing a single percentage figure. Comparing comparison rates from different lenders enables you to make a more informed decision by considering the total cost of borrowing. This ensures you have a clearer picture of the affordability of each loan option.
The loan term, or the duration of repayment, is a significant factor to consider when obtaining a merchant cash advance. It determines the length of time over which you will make repayments. Shorter loan terms usually result in higher monthly payments but lower overall interest costs, as the loan will be paid off in a shorter timeframe. Longer loan terms may offer lower monthly payments but could result in higher interest expenses over the life of the loan. It's crucial to evaluate your business's cash flow and financial goals to determine the loan term that suits your specific needs.
Flexibility in loan repayment is a valuable feature to consider when seeking a merchant cash advance. Early payout options allow you to repay the loan before the agreed-upon term without incurring any penalties or additional charges. This flexibility can be advantageous if your business experiences increased cash flow or you wish to reduce interest expenses. Before finalizing a merchant cash advance, review the terms and conditions to ensure that early repayment is possible and to understand any potential limitations or conditions that may apply.
Flexibility in loan repayment is a valuable feature to consider when seeking a merchant cash advance. Early payout options allow you to repay the loan before the agreed-upon term without incurring any penalties or additional charges. This flexibility can be advantageous if your business experiences increased cash flow or you wish to reduce interest expenses. Before finalizing a merchant cash advance, review the terms and conditions to ensure that early repayment is possible and to understand any potential limitations or conditions that may apply.
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