Merchant Cash Advance

A finance solution designed specifically for businesses that accept payments through a card machine.

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Applications are free, and won't affect your credit score.

How much do you need?

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Speed of Funding

Within Hours
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Interest Rate

Starting at 15%
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Finance amounts

Up to R5M
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Finance amounts

Up to R5M
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Factor Rate

Starting at 1.15
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Speed of Funding

Within Hours

Is a merchant cash advance right for you?

Here are a few simple details to help you decide.

MCA

Bank Loan

Funding Amounts

R10k to R2M
R500k to R5M

Speed of Funding

As little as 24 hrs
Multiple weeks

Fee Structure

Fixed factor rate
Interest rates

Best For

Businesses with a card machine
Businesses who own fixed assets

Early Settlement Penalties

No penalties. But no advantage to early repayment either.
Some times penalties for early settlement.

Repayment Structure

Proportional to revenue. Earn less, pay less.
Rigid monthly payments

Merchant Cash Advance

Traditional Bank Loan

Funding amounts

R10k to R5M
R1M+

Speed of funding application

As fast as 24 hours
Weeks to months

Fee structure

Factor rate
Interest rate

Best for

Business with a card machine
Business that owns a property

Early settlement

No discounts because total loan cost is fixed
Often penalties for early repayment

Repayment structure

You repay proportionally to your earnings. No income = no repayment.
Inflexible repayment structure. Normally over longer-terms.
Interested in pricing?
Use our Unsecured Loan Calculator to get an estimate on loan pricing
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Up to R5M
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Speed of Funding
Within Days
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Pay Tax/VAT

Fair and transparent fees

No referral fee

FundingHub does not charge you anything for an application - we're free to use, forever.

Flexible repayment terms

Cash advances have the benefit of payments that are proportional to your turnover. Earn less, pay less.

Easy payments

Automatic deductions from your card machine turnover means payment is hassle-free.

Merchant cash advance calculator

Use this handy calculator to check your fee's.
* Calculator assumes a factor rate of 1.2

What is a Merchant Cash Advance?

A merchant cash advance is a loan specifically designed for businesses (merchants) who use card machines to take payments.

The mechanism of funding, and repayment is what makes this product unique.

A merchant is essentially buying early access to their expected turnover, so that they can use the finance they need.

Why card machines?

Card machines provide an easy to interpret data source for lenders. It is a very predictable way to estimate how much a business can afford to repay.

They also make repayment very easy. Most MCA lenders automatically deduct a portion of your card sales, to make for easy and proportional repayment.

No collateral required

Because the lender is making a decision on your propensity to pay, not how many assets you own, this is a type of unsecured loan.

Unsecured loans like this use alternative data to make a loan decision.

Fast finance

Data-backed finance decisions typically happen in a matter of hours. You can expect funds to arrive in your account within days of your application. This does depend on the loan amount you are after.

Do you qualify?

Through FundingHub, you are likely to qualify for a merchant cash advance if you meet the following criteria:

  • You have a card machine
  • 6 months trading history
  • An average of R40k+ revenue per month through your card machine

* Figures are for example purposes only, and may vary from business to business.

How Does an Merchant Cash Advance Work?

A merchant cash advance has two main features:

  • It depends on how much revenue you make through your card machine.
  • How much you repay, and how fast you repay it is directly linked to how much revenue you make.

Factor Rate

The factor rate is essentially the cost or interest rate that gets charged to you for using the facility.

As an example, if a factor rate of 1.25 is applied to your R100 000 merchant cash advance, your total cost of finance will be R25 000. That's R100 000 x 1.25 = R125 000.

This means that the total amount you will have to payback is the loan (principle) amount multiplied by the factor rate.

The factor rate is calculated by the lender based on how risky they deem the loan to be. The more risk, the higher the factor rate.

Repayment Amounts

Repayment of your total loan amount usually happens on a proportional-to-revenue basis. This means that the more revenue you make, the more you repay, and vice-versa.

The % of your revenue which you repay will be decided between the you and the lender. This will be based on your affordability, and how much margin you have on your products.

💡 Tip: For an MCA, there is no advantage to early repayment. Because the factor rate is fixed, you will not be able to reap the benefits of lower interest payments if you repay earlier.

Repayment Terms

Because of the fact that your repayment is linked to how much revenue you earn, there is generally no fixed repayment period on a MCA.

If your revenue spikes, you repay the loan faster.

How Much Does a Merchant Cash Advance Cost?

The cost of a merchant cash advance is calculated using a Factor Rate. This determines your final loan cost.

The factor rate of your merchant cash advance can range from 1.15 to 1.4.

The three factors which affect the factor rate, and therefore cost, of the loan are:

A typical MCA Cost example:

A business loans R100 000 for 6 months, using a merchant cash advance facility.

They are relatively new business:

  • 12 months trading history
  • Moderate monthly turnover: R100 000 per month

The factor rate is 1.20.

The agreed revenue repayment portion is 10%.

The loan repayment schedule may look something like this:

Month
Revenue Earned
Repayment Amount
Balance
1
R120 000
R12 000
R113 000
2
R110 000
R11 000
R102 000
3
R290 000
R29 000
R73 000
4
R42 000
R4 200
R68 800
5
R180 000
R18 000
R50 800
6
R200 000
R20 000
R30 800
7
R210 000
R21 000
R9 800
8
R220 000
R9 800
R0.00
Total Repaid:
R120 000

* Figures are for example purposes only, and may vary from business to business.

Factors that affect the cost of a Merchant Cash Advance:

The calculation of your merchant cash advance factor rate includes things like:

  • How much card machine turnover your business makes every month
  • How variable your card machine turnover from month to month is
  • Your current debt levels
  • How long your business has been operating for
  • How many transactions your card machine turnover is made up of
  • The margin you charge on your products
  • Director's credit score. Although some lenders do not take this into account, and the majority of the risk is dependant on your business, some lenders will be wary if the business has any director's who are currently under debt review or have any adverse judgement against them.

What Can You Use an MCA Loan For?

Anything you'd like.

It's very seldom that a lender stipulates your use of funds.

Common Merchant Cash Advance Uses

Here is a list of some of the common reasons a merchant might want to use a merchant cash advance:

  • Working capital: For general cash flow in business operations.
  • Growth capital: Cash to grow your business through new ventures, or increased investment spend.
  • Buying inventory: Buying more stock so that you can sell more, and earn more revenue.
  • Tax/VAT Payments: If you are hit with a big tax bill that you may not be able to afford upfront you can finance it using an unsecured loan. An MCA will help you split up that payment over a few days.
  • Meeting payroll: If you have a slow month, and think you might not be able to pay your employee's, a MCA might help you out.

Remember: A MCA is a relatively expensive loan, so you should always consider what your use of funds is, and whether it's appropriate to use an MCA for that or not, given the cost.

Pro's & Con's of a Merchant Cash Advance

Advantages of a MCA

Here are some reasons why some business owners opt to use a merchant cash advance facility:

  • It's fast. Because it's a data-backed loan, and the data is normally readily accesible, loan decisions are made fast, and funds can be in your account within hours.
  • No security or collateral required. This makes it a great options for small businesses who do not own fixed assets like property.
  • A repayment structure that works with you. Revenue-proportional repayment means that you don't have the stress of worrying about slow months where revenue is down, and it's never going to cost you more if you take longer to pay.
  • No restriction on the use of funds. Although it's required that you have a card machine to qualify for this loan, there is no/little restriction (lender-dependant) on what you can do with the funding once you have it.
  • Free application. FundingHub will never charge you to make an application - or ever. Our service is free, and if you can get an MCA loan in SA - we'll help you find it.

Dis-Advantagse of an MCA

There are con's to MCA's too. Here are some of them:

  • It's expensive. Like any unsecured loan, a merchant cash advance is more expensive than your normal secured (property-backed) loan. This is because the increase in risk that the lender is undertaking.
  • No security or collateral required. This makes it a great options for small businesses who do not own fixed assets like property.
  • A repayment structure that works with you. Revenue-proportional repayment means that you don't have the stress of worrying about slow months where revenue is down, and it's never going to cost you more if you take longer to pay.
  • No restriction on the use of funds. Although it's required that you have a card machine to qualify for this loan, there is no/little restriction (lender-dependant) on what you can do with the funding once you have it.
  • Free application. FundingHub will never charge you to make an application - or ever. Our service is free, and if you can get an MCA loan in SA - we'll help you find it.

How Does the MCA Loan Application Process Work?

Because an MCA is a specialized product, we've designed a special application process that only takes up a small amount of your time, and collects the right information.
Here's how it works.

1

Step 1: Apply through FundingHub

One application form will mean you find MCA loan offers from over 15 different MCA-specific lenders.
It's fast, and free, and fully online.

2

Step 2: Add Information and Documents

If there are any supporting info or documents required, you can provide them during the application - or at a later stage too.

3

Step 3: View Loan Offers

We will present you with a list of all your loan offers. This takes seconds to fetch, and the list will be continually updated as you add more information to your profile.

4

Step 4: Choose an Offer

All the specifics around, pricing, fee's, speed of funds and the different lenders is laid out for you. If you have questions, we've got an independent analyst who can help you choose the right offer.

5

Step 5: Finalise Application with Lender

With your permission, your details will be shared with the lender who will disburse the loan to you. They'll collect your bank details, approve your offer and pay you out. We'll be here if you need any independent advice along the way.

Check your Merchant Cash Advance Options

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Applications are free, and won't affect your credit score.