How fixed costs are set

The upside of accepting a higher fixed cost

Worth saying upfront: fixed cost isn't purely a downside. Your fixed cost reflects lender confidence. Stronger card takings, steadier patterns and longer trading history usually mean a lower one. Newer businesses, seasonal income, or a larger advance relative to turnover usually mean a higher one.

The trade-off: accepting a higher fixed cost can unlock a larger advance if you need it. You decide where the line sits for your business. Fixed cost range is 1.10 to 1.50. Most approvals sit between 1.15 and 1.30.

1. Card volume

The single biggest lever. A business doing £8,000/month in card takings will see meaningfully higher fixed costs than one doing £40,000/month, on the same advance size. Volume is the lender's primary proxy for both repayment certainty and absolute repayment speed, and they price both into the rate.

2. Trading duration

Six months trading and twelve months trading produce different quotes. Lenders want a full seasonal cycle if they can get one, and most price a "newness premium" on accounts under 12 months. After 18 months of consistent card history, the duration variable mostly stops mattering.

3. Credit profile

MCA leans on card data, not credit files, but credit isn't ignored. A clean director's profile shaves maybe 0.05 to 0.08 off the fixed cost versus recent CCJs or defaults. Discharged bankruptcy isn't a blocker but typically adds 0.10. See MCA with bad credit for the full picture.

4. Sector

Some sectors price tighter than others. Pubs, cafes, salons and gyms, high-volume, predictable card mix, sit at the lower end of the rate band. Restaurants and takeaways sit slightly higher because of refund and chargeback risk. E-commerce can swing either way depending on chargeback ratios. Sector-specific guidance: pubs, cafes, salons, gyms.

5. Average ticket size

Lots of small transactions are easier to price than a handful of large ones. A salon doing £45 average tickets across 600 transactions a month is lower-risk to a lender than an equipment supplier doing three £9,000 invoices. Same total volume, very different pricing.

6. Processor mix

Lenders prefer split-funding-capable processors (Dojo, Worldpay, Square, Stripe, Zettle, SumUp). If your takings are fragmented across four processors, expect a slightly higher rate to compensate for the operational overhead. A single processor with 12 months of clean data is the gold standard.

Realistic UK ranges by scenario

• Strong applicant. 18+ months trading, £25k+ monthly card takings, clean credit, single processor: 1.15 to 1.22.
• Typical applicant. 12 months trading, £10 to 25k monthly takings, fair credit: 1.22 to 1.32.
• Stretched applicant. 6 to 9 months trading, sub-£10k takings, or recent credit events: 1.32 to 1.45.

Quotes outside these bands happen, but they should make you ask why. If a broker quotes 1.50 on what looks like a typical profile, get a second opinion.