What it is
Merchant Cash Advance, in plain words
Also called a business advance, cash advance, merchant advance or business cash advance. The funding is based mainly on your turnover and trading performance. The total cost is agreed upfront as a repayment factor, for example 1.25x, not as a monthly interest rate. Depending on the funder, repayment is either turnover-based, where the funder collects an agreed share of your future card or bank takings, or fixed, where an agreed amount is collected on a set schedule. With turnover-based repayments, where the funder's agreement is structured this way, it is a sale and purchase of future business revenue or receivables rather than a traditional loan. A fixed-repayment advance is set out differently by each funder, and the agreement states its legal structure, so read it before you accept.
You see the full cost before you sign
The funder shows you the advance, the repayment factor and the total you will pay back, in rand, before you accept. You then pick how it is collected.
Fixed repayments
The same amount comes off on set days, daily or weekly. Easy to plan around, but it does not drop in a quiet month.
Turnover-based repayments
A set share of your card takings goes to the funder until the agreed total is paid, so a slow week means a smaller collection. The South African SME Finance Association's Code of Conduct (2018) describes this card-split version as a purchase of future card receivables, not a loan.
Common questions
Is it paid back as a fixed amount each week, or a percentage of card or bank takings?
It can be either, depending on the funder. Some funders use a fixed daily or weekly repayment, while others collect a percentage of card or bank turnover.
If sales drop, do the repayments drop too?
If the repayment is turnover-based, the amount collected can reduce when sales reduce. If it is a fixed daily or weekly repayment, it generally stays the same unless the funder agrees to adjust it.
Is there a fixed end date?
There is usually an expected term, for example 3 to 12 months. With turnover-based structures, the exact end date can move depending on how quickly the agreed total amount is repaid.
Is the cost a fixed amount or interest?
The cost is agreed upfront as a fixed repayment factor, for example 1.25x. It is not presented as a traditional monthly interest rate.
May not suit you if…
- Your annual turnover is under R600,000
- Margins are thin enough that regular deductions would bite hard
- You're already repaying another daily or weekly deduction
What you'll be asked
- Who we can help
- Registered companies (Pty Ltd or CC) trading for at least 12 months, with funding from R50,000. A Merchant Cash Advance also needs annual turnover of R600,000 or more; other funding types have their own criteria.
- Asked first
- How you're paid, how much you need, what it's for
- Asked later, if you go ahead
- Bank statements, company documents, ID
- What they'll never ask for upfront
- Money before any funding is paid out