How much does a Merchant Cash Advance really cost?
Date: 03/07/26
What is a Merchant Cash Advance?
A Merchant Cash Advance is a type of business funding that gives business owners access to cash in exchange for their future card sales.
What fees are included in a Merchant Cash Advance?
A Merchant Cash Advance gives you a lump sum of money after your application is approved. The amount you qualify for depends on your business’s income. This total is then multiplied by a factor rate. For example, if you receive a cash advance of £100,000 and your factor rate is 1.3, you will repay £130,000.
Rather than fixed monthly repayments, you repay the advance through daily or weekly payments taken as a fixed percentage of your business’s income.
The repayment percentage is chosen during the application process. In simple terms, this means your repayments flex with your revenue — when your business takes more, you pay more, and when it takes less, you pay less. The total repayment amount, however, is fixed from the outset based on the factor rate.
Do Merchant Cash Advances have hidden fees?
Merchant Cash Advances are very transparent. You decide the repayment percentage upfront and will be shown how much you must repay. It is important to note, that you will pay back more than you are given, depending on the factor rate decided upfront.
How are repayment costs calculated?
Repayment costs are calculated using a factor rate, which is different to interest. This means the total amount you repay is higher than the cash advance you receive; however, this total is agreed upfront. Businesses with a higher turnover and consistent income often receive a lower factor rate. This is all calculated in advance and will not change over time. You also choose the repayment percentage during the application process, which comes out of your business’s income.
Is the cost worth it for your business?
Merchant Cash Advances can be more expensive than traditional business loans, so it is important to understand the total cost before applying. Unlike a loan with interest, the cost is calculated using a factor rate, which sets the total repayment amount upfront. This means you will repay more than the amount you receive, but you will know the full amount from the start.
It is important that businesses do not become overly reliant on this type of funding, as merchant cash advances are typically designed for short-term use. For example, they can be used to buy stock, hire staff, or fund renovations.
As long as businesses make an informed financial decision by weighing the overall cost against the speed and flexibility of a cash advance, it can often be worth the extra cost. Additionally, the repayment process works in line with your business’s performance, meaning payments are based on your income — so when your business takes more, you repay more, and when it takes less, you repay less.
What Merchant Cash Advance can you access as a Handepay customer?
As a Handepay customer, you can get a Merchant Cash Advance through YouLend. YouLend provides quick access to a cash advance through a very simple application.
To find out more about Handepay’s partnership with YouLend: visit our business finance page here.
If you are interested in applying for a YouLend cash advance: follow the link to start an application here.
Available to existing Handepay merchants receiving acquiring services from an acquiring provider organised through Handepay who have not entered into any other agreement with third parties for the sale of their receivables. Eligibility criteria will apply. Business must be trading for 3 months or more, with a minimum of £3,000 in card transactions per month.
All Cash Advance applications are processed by the independent service provider, YouLend Limited. The cash advance is a sale of future card receivables, not a loan, and is not subject to the regulation and legal protections applicable to loans that are consumer credit or regulated mortgage contracts. Handepay’s activities in relation to the YouLend products do not constitute regulated credit broking.