Is A Merchant Cash Advance Like a Traditional Loan

Compare a range of financing options from a panel of lenders

Over 200 lenders from banks to alternative providers (including the CBILS)
Borrow betweeen £1,000 and £5m, rates from 2.5% APR
Funds received in as little as 24 hours
100% free, no obligation service

Access Finance For Your Business In 3 Steps

Enter Your Details

Complete your application in under 30 seconds. No paperwork is required.

Compare Financing Options

Compare over 70+ financial products & receive expert guidance

Receive Funding

Successful clients can receive funding in as little as 24 hours.

Home » Business Finance » Is A Merchant Cash Advance Like a Traditional Loan

Although merchant cash advances are often compared to a traditional bank loan, as the name suggests, they actually work slightly differently. A merchant cash advance is not actually considered to be a loan, instead, it is a form of advance payment borrowed against the your business’ future income.

The initial sum put forward by a merchant cash advance provider is repaid through card payments and ecommerce transactions. The percentage that a business is expected to repay each month out of their takings is predetermined when the cash advance is agreed upon.

Merchant cash advances and traditional loans are comparable in their uses. Both can be used to invest in similar areas; whether this is new improved equipment, more inventory to increase output, boosting employee numbers to deal with an increase in business, which is a common requirement for certain industries like bars and restaurants that see a boom in customers during hotter months.

Unlike a traditional bank loan, however, merchant cash advances can be secured in much less time. So, businesses that require investment immediately and cannot wait for the long process of securing a loan with their bank often resort to merchant cash advances instead.

A loan agreement with your bank may see you paying a large portion of your taking each month in order to repay. With a merchant cash advance things are different. With an agreed upon repayment percentage, you will always receive the lions share of your takings no matter how much, or how little business you receive that month.

At Quote Goat you can compare merchant cash advance options in order to find one that best suits your business. There are plenty of options out there to choose from so make sure you compare as many options as you can so that the best deal doesn’t slip through the net.