Merchant Cash Advance

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WE SPECIALISE IN SOURCING BUSINESS LOANS FOR WORKING CAPITAL

The Challenge of Getting Business Funding

Many small businesses struggle to get money from traditional banks. The process takes a long time, requires a lot of paperwork, and often asks for something valuable as security. In today’s fast-moving world, businesses need quick and flexible funding to grow and stay ahead.

Helping Businesses with Revenue-Based Funding

Lampi Capital connects businesses with lenders that offer a different way to get funding. Instead of strict bank loans, our partners provide funding based on how much money a business makes. This type of funding offers:

Fast Access – Businesses can get money in 24-48 hours
Flexible Payments – Repayments change based on business income
No Collateral Needed – No need to put up valuable assets
Room to Grow – Get funding from £5,000 to £1 million
More Funding Later – Businesses can apply for more funds after paying back 60% of their loan

Who Can Get Funding?

Getting funding through Lampi Capital’s network is easy. A business may qualify if it:

Makes £5,000+ in sales each month
Has been open for at least 3 months
Accepts card payments or sells online (including food delivery platforms)
Is any type of legal business

How Can the Money Be Used?

Businesses can use this funding for almost anything, including:

Growing the Business – Opening new locations or launching new products
Managing Cash Flow – Making payments easier with flexible repayments
Hiring More Staff – Expanding the team to serve more customers
Paying Unexpected Bills – Covering surprise costs like taxes

Strong Support & High Lending Potential

Our lending partners work with major financial institutions, meaning they have the money and willingness to help businesses grow. Companies all over the UK and Europe can get the funding they need to succeed.

If you're looking to expand, manage cash flow, or grab a new opportunity, now is the time to get the funding you need!

Check out the 14 benefits of our merchant cash advance service:

Get funds within 24 hours of approval.
No need for collateral or assets.
Transparent pricing without any extra fees.
Repay through a fixed percentage of future credit and debit card sales (simple repayment structure).
Repayments can adapt to your business's busy and slow periods.
We cater to various industries, including retail, hospitality, leisure, restaurants, pubs, bars, online businesses, online shops, salons, garages, hotels, and more.
No rigid repayment terms.
Pay back less during slow times and faster during busy periods.
Customized costs based on your business's performance.
Quick application process with step-by-step assistance.
Compatible with various online payment providers.
Suitable for seasonal businesses.
We compare quotes from multiple lenders to find the best deal.
Provider-specific policies for loan renewals.

Experience the benefits of our merchant cash advance and propel your business forward with ease.

How does a merchant cash advance work?

A Merchant Cash Advance (MCA) offers businesses a quick and alternative financing option for accessing capital. Unlike traditional business loans, an MCA provides a cash advance in exchange for a percentage of future credit card sales.

The MCA provider collects a fixed percentage of daily or weekly sales until the advance and agreed fees are fully repaid.

"One of the main advantages is that repayments are linked to your monthly card sales. If debit and credit card sales decrease in a given month, your repayments also decrease, making cash flow easier to manage."

What can I use a merchant cash advance for?

A merchant cash advance (MCA) is a flexible business financing solution that can be utilized for various purposes to support your growth and operational needs.

Common uses for an MCA include:

• Stock purchases - Buy stock in bulk, restock popular items, or invest in new products to expand your business offerings.

• Equipment upgrades - Upgrade outdated equipment or invest in new technology to enhance efficiency, productivity, and product/service quality.

• Working capital - Use the MCA for day-to-day expenses like rent, utilities, payroll, and supplies during slow sales or seasonal fluctuations.

• Marketing and advertising - Boost your marketing efforts by launching new campaigns, improving your website, or attending industry events to attract more customers.

• Expansion and renovation - Utilize the funds to open a new location, renovate your current space, or add new services to meet customer demand.

• Debt consolidation - Combine expensive high-interest debts or short-term loans into a single MCA to potentially lower overall finance costs.

• Paying tax bills - Use funds to cover VAT or corporation tax bills. • Emergency expenses - Access quick funds for unforeseen expenses, such as repairs, legal fees, or other emergencies.

What Types of Business Might Benefit From A Merchant Cash Advance?

A Merchant Cash Advance (MCA) can be a suitable financing solution for businesses that generate significant revenue through credit or debit card sales. Here are some types of businesses that might benefit from an MCA:

Retail shops: Businesses like clothing stores, electronics shops, and specialty boutiques often have a high volume of credit card transactions, making them good candidates for an MCA.
Hotels, restaurants, and bars: Establishments in the hospitality industry, such as hotels, restaurants, cafes, pubs, and bars, also tend to have a substantial number of credit and debit card sales, making an MCA a viable option for managing cash flow or investing in growth.
Hairdressers & beauty salons: Hairdressing businesses, beauty salons, pet care salons, and other personal care businesses frequently rely on credit card transactions, making them eligible for an MCA to fund equipment upgrades, expansion, or marketing efforts.
E-commerce businesses: Online retailers that process a large number of credit card transactions can benefit from an MCA to support stock purchases, website improvements, or online marketing campaigns.
Motor vehicle services: Garages, tire fitting businesses, and other motor vehicle service providers with a significant portion of their revenue from credit card sales might find an MCA helpful for equipment purchases or facility improvements.
Seasonal businesses: Businesses with fluctuating sales, such as travel agents, tourism-related ventures, or seasonal retailers, can use an MCA to manage cash flow during slow periods or invest in growth opportunities during peak seasons.
Healthcare providers: Dentists, physiotherapists, chiropractors, and other healthcare providers who accept credit card payments may benefit from an MCA for equipment upgrades, office renovations, or marketing efforts.

THE MCA PROCESS

Application - To initiate the process, a business owner applies for an MCA with a provider, providing details about their business and credit card sales volumes.
Approval - The MCA provider evaluates the application, assessing the financial health of the business and its credit and debit card sales to determine eligibility.
Funding - Once approved, the MCA provider transfers the agreed-upon amount to the business's bank account, usually within 24-48 hours.
Repayment - The MCA provider collects a fixed percentage of the business's daily or weekly card sales until the advance and fees are fully repaid.

What are the Minimum Requirements to Qualify for an MCA?

The minimum requirements to qualify for a Merchant Cash Advance (MCA) can vary among providers. However, most providers will consider the following standard criteria when reviewing your application:

Business age: MCA providers usually require your business to be operational for a minimum period, typically three months to one year or more. This helps demonstrate financial stability and a consistent revenue stream.
Credit card sales volume: Since an MCA is based on your business's future credit and debit card sales, providers require a minimum level of monthly card sales to ensure you can repay the advance. This amount can vary but generally ranges from £2,500 to £5,000 or more per month.
Industry type: Some MCA providers may have restrictions on the types of industries they serve. They might avoid businesses in sectors with high volatility, high risk, or inconsistent revenue.
No active bankruptcies: Most cash advance providers will not approve an application if the business owner has an active default.
Business bank account: You'll need an active account to receive the advance and facilitate repayments.
Documentation: MCA providers typically require various documents to assess your business's financial health, such as business bank statements, credit card processing statements, and identification.

It's important to note that each MCA provider may have slightly different eligibility criteria, and some may be more flexible than others.

What are the distinctions between a loan and a merchant cash advance?

Although both loans and MCAs offer funds to UK businesses, there are several key differences:

Repayment - Loans involve fixed monthly payments, whereas an MCA is repaid through a percentage of daily or weekly credit and debit card sales. This flexible repayment structure can be advantageous for businesses with fluctuating sales.
Approval Process - Loans often necessitate good credit scores and collateral, while MCAs typically have a more lenient approval process, focusing on the business's card sales rather than credit history.
Interest Rates - Loans usually come with fixed interest rates, whereas MCAs have factor rates, which can make them comparatively more expensive.
Funding Speed - MCAs are renowned for their quick approval and funding process, while loans may take days or even weeks to get approved.

Example of what a business owner might pay for an MCA facility

An illustration of the potential cost of a business cash advance can be influenced by various factors, such as the advance amount, the factor rate, and the business's daily debit and credit card sales.

Here's an illustrative example to help you understand what a business owner might pay for an MCA facility:

Let's say a shop owner requires an MCA of £20,000 to invest in stock and an online marketing campaign. The MCA provider offers the funds with a factor rate of 1.25.

To determine the total repayment amount, we multiply the advance amount by the factor rate:

£20,000 * 1.25 = £25,000

Thus, the total repayment amount for the MCA would be £25,000.

Now, assuming the retail shop's average daily credit card sales amount to £1,000, the MCA provider sets a retrieval rate of 10% for the repayments.

To calculate the daily repayment amount, we multiply the average daily credit card sales by the retrieval rate:

£1,000 * 0.10 = £100

Consequently, the shop owner would repay £100 daily until reaching the total repayment amount of £25,000.

Additionally, to estimate the approximate duration of the repayment, we divide the total repayment amount by the daily repayment amount:

£25,000 / £100 = 250 days

In this example, the retail shop owner would repay the MCA in approximately 250 days.

Keep in mind that the repayment duration may vary due to fluctuations in daily debit or credit card sales.

What is the factor rate used in a merchant cash advance?

The factor rate utilized by a Merchant Cash Advance (MCA) provider is a multiplier that determines the total cost of the advance.

Unlike traditional business loans, it represents the borrowing cost rather than an interest rate.

The factor rate typically falls within the range of 1.1 to 1.5, varying based on factors such as the provider's terms, perceived risk of the borrower, advance duration, and industry. A higher factor rate indicates a higher overall cost for the MCA.

To calculate the total repayment amount, you multiply the advance amount by the factor rate:

Total Repayment Amount = Advance Amount × Factor Rate

For instance, if a business owner receives an MCA of £10,000 with a factor rate of 1.3, the total repayment amount would be:

£10,000 × 1.3 = £13,000

Thus, in this example, the business owner must repay £13,000 for the £10,000 advance.

Is a merchant cash advance a suitable option for my business?

Determining whether an MCA is a good fit for your business depends on your specific circumstances.

MCAs can be appealing for businesses that:

Experience seasonal fluctuations in revenue.
Require quick access to funds.
Have lower credit scores.

However, before committing to an MCA, it is crucial to carefully weigh the pros and cons.

Pros of MCAs:

Fast funding process - Businesses can receive funds within 24-48 hours.
No collateral required - MCAs are unsecured, eliminating the need to provide assets as collateral.
Flexible repayment structure - The repayment amount adjusts based on your card sales, providing flexibility during slow periods.

Cons of MCAs:

High costs - MCAs typically come with higher factor rates compared to traditional business loans, making them potentially more expensive in the long run.
Potential cash flow issues - The daily or weekly repayments can strain a business's cash flow, especially during slower periods.
Debt cycle risk - Some businesses may find themselves taking on additional MCAs to repay existing ones, leading to an unhealthy cycle of debt that can be challenging to break.

Do cash advances affect your credit score?

Cash advances, such as Merchant Cash Advances (MCAs), do not directly impact your personal credit score since they are not reported to credit agencies like traditional loans.

However, if you default on an MCA, the provider may take legal action or sell the debt to a collections agency. In such cases, the debt collection activity could negatively affect your credit score.

What is the maximum amount for a merchant cash advance?

The maximum amount for an MCA is dependent on your business's monthly credit or debit card sales. Typically, MCA providers offer advances of up to 250% of your monthly credit card sales.

For instance, if your business processes £10,000 per month in card sales, you could be eligible for an MCA of up to £25,000. However, the maximum amount can also vary based on the provider's terms and your business's financial health.

Do you have to repay a merchant cash advance?

Yes, a merchant cash advance needs to be repaid. Repayment occurs through a fixed percentage of your daily or weekly future card sales, known as the "holdback rate."

The provider will continue to collect this percentage until the advance, along with the agreed-upon fees, is fully repaid.

Can you settle a merchant cash advance early?

In most cases, you can settle a Merchant Cash Advance (MCA) early. However, the benefits of early repayment may vary depending on the terms set by the MCA provider.

Since MCAs use factor rates to determine the total repayment amount, the overall cost is typically predetermined and remains unchanged even if you repay the advance early.

Some MCA providers might offer a discount or a rebate on the total repayment amount for early repayment, while others may not provide any financial incentive for repaying early. Business owners considering early repayment should discuss this with the MCA provider before signing an agreement and explore other financing options that may offer better conditions for early repayment.

Are merchant cash advances expensive?

Yes, merchant cash advances are generally more expensive than traditional business loans due to their higher factor rates. Factor rates typically range from 1.1 to 1.5, meaning you could end up paying 10% to 50% more than the initial borrowed amount.

Furthermore, some MCA providers may charge additional fees, such as setup or processing fees, which can add to the overall cost.

Is a merchant cash advance safe?

While merchant cash advances are a legitimate financing option, they can carry some risks for certain businesses.

It's essential to conduct research on MCA providers, read customer reviews, and compare offers to ensure you are choosing a safe and reputable provider for your financing needs.

Who uses merchant cash advances?

Merchant cash advances are commonly utilized by various types of businesses, including retail stores, restaurants, and service-based establishments that generate a substantial volume of card sales. These businesses often experience seasonal fluctuations in revenue, making the adaptable repayment structure of an MCA an attractive option.

Nonetheless, any business seeking rapid access to funds and maintaining a consistent flow of card sales might also contemplate using an MCA.

Is an MCA an unsecured financing option?

An MCA is not considered a loan; rather, it involves the sale of a portion of a business's future credit card sales. As the MCA provider purchases future receivables, there is typically no collateral required, making it an unsecured form of financing.

However, it's important to note that some MCA providers may request a personal guarantee, which could put your personal assets at risk in case of defaulting on the MCA.

What happens if you default on an MCA?

Defaulting on a merchant cash advance can have severe consequences. The MCA provider may take legal action to recover the outstanding funds owed. Additionally, they may delegate the debt collection to a collections agency, which can negatively impact your credit rating. In some cases, the provider may place a lien on your business's assets or seize them to recover the debt.

Before accepting funds through an MCA, it's essential to thoroughly understand the terms and conditions and ensure that you have a plan in place to manage the repayments.

Do I need to undergo a credit check to obtain an MCA?

The primary focus of a Merchant Cash Advance (MCA) is a business's credit and debit card sales. However, MCA providers typically perform a credit check on the business owner as part of their evaluation process. While the credit check helps assess the overall risk of providing the advance, MCA providers generally place less emphasis on personal credit scores compared to traditional loans. Instead, they are more concerned about the business's ability to generate consistent card sales to repay the advance.

It's important to remember that each MCA provider may have different application processes and requirements, and while some may perform a credit check, others may not.

Can I obtain an MCA without business bank statements?

Most MCA providers require business bank statements to assess the financial standing of the applicant before granting a Merchant Cash Advance (MCA). These statements, typically covering the past six months, provide a clear picture of the business's financial health and play a vital role in determining eligibility for the MCA.

While some MCA providers may accept bank statements for just the last three months if the business has been trading for less than six months, it's essential to check with the provider about their specific requirements.

While some MCA providers may consider alternative documentation or factors instead of business bank statements, most will likely require them as part of the application process.

Can I get an MCA with a bad personal credit score?

Yes, it is possible to obtain a Merchant Cash Advance (MCA) even with a bad personal credit score. MCA providers typically place more emphasis on the business's performance, especially its credit and debit card sales, rather than the owner's personal credit score when evaluating eligibility.

As an MCA is based on the business's future revenue, providers are primarily interested in the business's ability to generate consistent credit card sales to repay the advance. This makes MCAs more accessible financing options for business owners with poor credit histories.

However, having a bad credit score might affect the terms of the MCA, such as the factor rate or the advance amount. MCA providers may view businesses with adverse credit as riskier, leading to less favourable terms.

Before opting for an MCA, business owners with bad credit should carefully consider the costs and repayment structure and explore alternative financing options that may suit their needs.

What should I consider before getting a Merchant Cash Advance?

Before deciding on a Merchant Cash Advance, it's essential to evaluate your business's financial health and explore alternative financing options. Here are some key points to consider:

Assess your cash flow: Analyse your business's cash flow to ensure you can manage an MCA's daily or weekly repayments, especially during slow periods.
Compare costs: MCAs can be more expensive than traditional loans, so explore alternative funding options to determine the best fit for your business.
Review the provider's reputation: Research MCA providers, read customer reviews, and ensure they have a track record of helping businesses similar to yours.
Seek professional advice: Consult with your business accountant to assess your financial health, review MCA terms, and explore other financing options.

What to look for in an MCA provider?

When searching for an MCA provider, consider the following factors:

Transparent pricing: Choose providers that offer clear and transparent pricing, including factor rates, fees, and repayment terms.
Flexible terms: Seek providers that offer repayment flexibility based on your business's needs and cash flow.
Fast funding: Select providers that can provide funds quickly, typically within 24-48 hours.
Reputable: Research the provider's reputation, read customer reviews, and ensure they have a history of helping businesses like yours.
Customer support: Look for providers with responsive customer support to assist you throughout the MCA process.

How to apply for a Merchant Cash Advance (MCA)?

To apply for an MCA, follow these steps:

Research MCA providers: Research various MCA providers to find one with competitive terms, transparent pricing, and a strong reputation.
Gather necessary documentation: Prepare the required documents for your MCA application, such as business bank statements, credit card processing statements, and identification.
Submit your application: Complete the MCA provider's application process, which may involve filling out an online form or contacting a representative directly. Provide information about your business's age, average monthly revenue, and credit card sales.
Review offers: If your application is approved, review the MCA provider's offer, including the advance amount, factor rate, holdback rate, and repayment terms. Carefully read the contract and ask questions about any unclear terms or fees.
Accept the offer and receive funds: Once you agree to the MCA terms, the provider will deposit the funds into your business bank account within 24-48 hours. The repayment process will begin when you start processing credit card transactions.

Can I get a same-day merchant cash advance facility set up?

Yes, in some cases, it is possible to get a same-day Merchant Cash Advance (MCA) facility set up. MCA providers are known for their relatively quick approval and funding processes compared to traditional financing options. Some providers can approve an application and provide funds within 24 hours or even on the same day.

However, the speed of approval and funding can depend on various factors, such as the specific MCA provider's processes and requirements, the completeness and accuracy of the application and supporting documentation, and the volume of credit and debit card sales generated by your business.

While speed may be a primary consideration, it's essential to evaluate other factors such as costs, terms, and the repayment structure to ensure that the MCA facility aligns with your business's needs.

Can I keep my existing EPOS card machine when I take out an MCA?

Whether you can keep your existing Electronic Point of Sale (EPOS) card machine when taking out an MCA depends on the specific MCA provider's requirements.

While some MCA providers may be flexible and allow you to continue using your current card terminal machine, others may require you to switch to their preferred card processing system or use their EPOS card machine for seamless repayment of the advance.

Before committing to an MCA, it's crucial to discuss your existing EPOS card machine situation with potential MCA providers and understand their specific requirements.

Lampi Capital Ltd is unregulated and does not have FCA permissions.
Some types of finance such as bridging, development, commercial and buy to let mortgages may not be regulated by the Financial Conduct Authority.
Fees may be payable for advice and/or arrangement of your loan.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up the repayments on it or any other loan secured against it. Think carefully before securing other debts against your home.

Please seek tax advice, prior to taking out any unsecured facilities. If required, we would be more than happy to make an introduction to one of our tax specialist partners.