What is a merchant cash advance? A simple guide for UK business owners
A merchant cash advance (MCA) is one of the fastest, most flexible ways for a UK business to raise working capital — and one of the most misunderstood. This is a five-minute primer that strips out the jargon.
The simple definition
An MCA gives you a lump sum upfront in exchange for a small, fixed percentage of every future card transaction until an agreed amount is repaid. Repayments are automatic and proportional to your sales — busy week, you repay more; quiet week, you repay less.
How a typical deal looks
- You take £30,000 advance.
- Agreed total repayable: £36,000 (factor of 1.2).
- Repayment: 10% of every card transaction collected at source.
- No fixed monthly payment, no APR, no compounding interest.
- Funds in your account, typically within 48 hours.
Who it's built for
- Businesses where most revenue comes through card payments (hospitality, retail, salons, gyms).
- Owners who've been turned down by a bank or don't want to pledge personal property.
- Seasonal traders who need flexible repayments.
- Businesses that need cash this week, not next quarter.
An MCA does not take money from your bank account. The agreed percentage is collected directly from your card processor before it hits your bank — so you never 'see' the repayment leave you.
What to watch out for
- Factor rate clarity. Insist on knowing the total repayable, not just the factor.
- Top-up policies. Find out what 'renewal' means — some providers refinance early at a penalty.
- Processor lock-in. Some MCAs require you to switch card processor. That's not always a bad thing, but it has to be your choice.
- Personal guarantees. Some lenders ask for one, some don't. Compare.
"An MCA isn't cheap, but it's honest: one number, no surprises, repaid at the pace your business actually moves."
- MCA = lump sum repaid as a % of card sales until a fixed total is cleared.
- Fast, flexible, no APR — but headline cost is higher than a bank loan.
- Best suited to card-heavy and seasonal businesses.
- Always ask for the total repayable upfront, in writing.
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