An alternative to a Merchant Cash Advance
Updated: Dec 10, 2021
An Adelpha Business Cash Advance is a valuable alternative to a Merchant Cash Advance. Providing fast and flexible finance from £1,000 to £50,000 that is not linked to credit/debt card sales
What is a Merchant Cash Advance?
A Merchant Cash Advance is a lump sum given as a cash advance based on the credit/debit card sales of a business. In basic terms, a merchant cash advance is akin to “selling” a portion of your predicted credit/debit card sales in order to obtain funding immediately.
How does a Merchant Cash Advance work?
If the application is successful, the lender will make an agreement with the business owner regarding the cash advance amount, repayment amount, holdback, and the terms of the cash advance. After the agreement is signed, the funds will be transferred to the small business.
Then a fixed percentage of the daily credit/debit card sales is automatically deducted through the merchant account. This is known as a “holdback” and the process will continue until the total amount required to be paid back has been paid. The total amount payable is calculated by a factor rate (the lender’s charge).
As an example:
A carpet shop is advanced £10,000 and the lender charges a 1.35 factor rate. This means the carpet shop has to repay £13,500 in total (a lender’s charge of £3,500). The agreed holdback is 10% on daily credit/debit card sales. If the carpet shop averages £15,000 every month in credit/debit card sales, that means £1,500 is collected every month for repayment. It will then take nine months for the carpet shop to repay the £13,500 in full.
Why an Adelpha Business Cash Advance is a better alternative?
The Adelpha Business Cash Advance is a valuable alternative to a Merchant Cash Advance. We take the time to understand your requirements and understand that an advance can be the difference between the continued success of your business and the potential for financial difficulty.
The size of an Adelpha Business Cash Advance is determined considering your total income and business performance and not just your credit/debit card sales. Many business types do not process sufficient card payments and therefore cannot get a large enough Merchant Cash Advance. Our flexible finance ranges from £1,000 to £50,000 and gives business owners the peace of mind there finances are sorted so they can get on with the day to day running of their business.
The repayment of an Adelpha Business Cash Advance is made through an individually tailored weekly, fortnightly or monthly payment schedule for up to 12 months. The schedule is agreed with the borrower before the advance is made and is structured to suit the borrowers expected business cashflows. For example, if your business is seasonal, we will agree a lower payment in the quieter weeks. Unlike a Merchant Cash Advance, we can agree to delay in the commencement of the repayment schedule. Repayments are typically made by direct debit but we can facilitate payments through bank transfer or from a credit card. We will make sure you understand upfront all the interest and associated charges clear to you.