Is a merchant cash advance right for you?

The first and bluntest filter. MCA is mechanically tied to your card takings, the lender's entire underwriting and repayment model assumes a steady stream of card sales. If the card volume isn't there, the product simply doesn't fit, regardless of how strong the rest of your business is.

The numbers most UK lenders want to see:

• £2,500/month minimum in card takings to qualify at all.
• £5,000+/month for a meaningful advance (£3k to £8k+).
• £15,000+/month opens up advances of £15k to £30k+ on first-time facilities.
• Typical advance is roughly 100 to 150% of average monthly card takings. So a business doing £10k/mo on cards usually accesses £10k to £15k initially, more on renewals once a repayment track record is in place.

Pull the last 6 months of card processor statements (Dojo, Square, Zettle, Stripe, SumUp, PDQ, whatever you use) and average them. That number, multiplied by 1.0 to 1.5, is roughly what's available to you.

Two important corrections. First, direct debit revenue isn't card revenue. A gym with £30k/mo of memberships on DD and £4k/mo on cards has card capacity of around £4k to £6k, not £30k. Second, cash takings don't count for MCA underwriting. They're yours, but they don't enable borrowing. If most of your takings are cash, talk to Funding Flow about a term loan instead.

MCA is a short-to-medium-term instrument. The typical UK facility clears in 3 to 18 months. The product wasn't designed to spread cost over multiple years, and trying to use it that way produces a cost-of-capital that's rarely justifiable.

The right way to think about it is to match the term of the facility to the term of the benefit:

• Need a 4 to 9 month bridge, seasonal stock-up, marketing campaign, kit replacement, ad-spend scale, Q4 inventory. MCA fits well.
• Need a 2 to 5 year facility, site acquisition, major fit-out, large equipment, business purchase. A term loan is the right tool. The repayment profile matches the asset life.
• Need to spread a one-off equipment cost asset finance wins. See Check 4.

A useful test: if the thing you're buying will still be earning you money in three years' time, MCA probably isn't the right way to finance it. If the thing you're buying will pay for itself in the next two trading quarters, MCA is well-suited.

For a lot of businesses, the honest answer is yes. A high-street or alternative-lender business term loan typically prices materially cheaper than an MCA on a like-for-like basis. A typical UK MCA fixed cost of 1.25 over 6 months means you repay £12,500 on £10,000, £2,500 of cost. A comparable term loan over the same six months would normally cost a fraction of that.

On a £10,000 advance over 6 months:

• Term loan, typical total cost a few hundred pounds.
• MCA at 1.25 factor, total cost £2,500.

That looks like a slam-dunk for the term loan, and on cost alone it is. The reason MCA still wins for many businesses is what's in the trade-off:

• Term loans require cleaner credit, usually no recent CCJs, no defaults in 12 months, decent personal score for the director.
• Term loans want filed accounts, typically two years. Newer businesses may not qualify.
• Term loans can also fund inside 48 hours these days, so speed alone is no longer the MCA edge. The real edge is what each lender will accept.
• Term loans have fixed monthly repayments no flex if a month is quiet.

Asset finance is a different mechanic. The lender effectively buys the equipment for you and you repay over its useful life. The equipment is the security, which lets the lender price much more cheaply than MCA, typical for hard assets like vehicles, kitchen kit, gym equipment, and most commercial machinery.

The simple rule:

• You're buying a specific piece of kit worth £3k+, asset finance probably wins.
• You need general working capital, stock, marketing, payroll bridge, mixed use, MCA fits. Asset finance can't fund “the business” in the abstract.
• Mixed need, some equipment, some working capital, we often recommend stacking: asset finance for the kit, a smaller MCA for the rest.

Asset finance is a Funding Flow desk, not an MCA desk. If your need is mostly equipment, we'll point you over without hesitation.

This is where the calculus shifts. MCA's headline cost is higher than a term loan, but its real edge is accessibility. MCA underwriting prices off card takings, so sole traders, thin or no filed accounts, and imperfect credit (CCJs, defaults) can still qualify with just 6 to 12 months of card data. Term loans can also fund inside 48 hours now, so the choice is more about who will accept the deal than who is faster.

Three scenarios where speed has real, quantifiable value beyond headline cost:

• An invoice is overdue and a supplier is about to stop deliveries. Lost trading days from a supply break can dwarf the MCA cost.
• A peak season is a fortnight away and stock isn't in. Missing Q4 or a wedding season can cost more than the entire fixed cost.
• Critical equipment has failed. Closed days while you find a term loan often cost more than the MCA fixed cost would.

MCA also wins on accessibility. Lenders weight card trading data more heavily than personal credit, so businesses with thin accounts, recent CCJs, or directors with imperfect credit can still qualify when a high-street loan would decline.

The honest framing: if you're not under time pressure and your credit is clean, you're probably overpaying with MCA. If you're under genuine pressure or your credit is imperfect, MCA is often the only product that actually functions.

The scenarios where we'll quote MCA confidently:

• Strong card volume, short-term need. Stock buy ahead of peak, marketing campaign, kit refresh, fit-out during quiet trading.
• Imperfect credit, healthy trading. Card data tells the underwriting story when the personal score doesn't.
• Speed matters. Equipment failure, supplier deadline, peak window closing.
• Newer business, thin accounts. 6 to 12 months of card data is worth more than partial filed accounts.
• Variable revenue, want flex. Repayment that rises and falls with takings is a feature, not a bug.
• Top-up on a successful previous facility. Track record on a first MCA usually unlocks better terms on renewal.

The scenarios where we'll either decline to quote or flag a better alternative:

• Mostly cash or DD revenue. The mechanic doesn't fit and the advance won't be useful.
• Multi-year capital project. Site acquisition, major refurbishment, business purchase. Use a term loan via Funding Flow.
• Single piece of equipment. Asset finance will price 3 to 5× cheaper.
• Clean credit and time on your side. A term loan will always price better. Use the few weeks.
• Tax bill (VAT, corporation tax, PAYE). There's a sister site, taxbill.loansthat specialises in HMRC funding.
• Quoted fixed cost above 1.35 on a sub-4-month term. The cost-of-capital is punitive. There's nearly always a better instrument, we'll find it.

Five questions. Answer them honestly and you'll know which product to ask us about.

1. Are your monthly card takings at least £2,500?
   No → Term loan via Funding Flow. MCA mechanic doesn't fit.
2. Is the funding need a single piece of equipment worth £3k+?
   Yes → Asset finance via Funding Flow. Cheaper.
3. Will you need to repay over more than 12 months?
   Yes → Term loan via Funding Flow. Better-matched repayment profile.
4. Is your credit clean AND do you have 2+ weeks to arrange funding?
   Yes → Try a term loan first. Cheaper if you qualify.
5. Do you need money inside 48 hours, or do you have imperfect credit / thin accounts?
   Yes → MCA is the right tool. Quick Apply.

Want this as an interactive quiz that does the routing for you? Use the 60-second quiz.