Most shops have the same cash problem: you pay for stock before you sell it, and the money comes back in small amounts, every day, mostly by card. The funding that tends to fit retail follows that pattern. A cash advance repaid from your card takings is often the closest fit. It isn't the only one.
Which funding tends to fit, and why
| Funding type | Tends to fit when... | Why it suits retail |
|---|---|---|
| Merchant cash advance (MCA) | You take most sales by card and turn over at least R600,000 a year | The card-split version takes a share of your card takings, so it's repaid from the same daily sales the stock produces. The South African SME Finance Association's Code of Conduct says the cash advance is "suitable for all businesses that accept debit and credit card transactions", and recommends an affordability assessment for businesses with low profit margins. |
| Working capital | You need to pay more than one supplier, or your turnover is under R600,000 a year | General funding not tied to one invoice or order. Usually repaid in fixed instalments. |
| Asset finance | You need a delivery bakkie, fridges or other equipment | The asset is what the funding is for. Repaid monthly over an agreed term. |
| Purchase order funding | A business customer has placed a confirmed bulk order with you | Pays your supplier to fill that order, settled when the customer pays. More common for wholesale than for shops. |
Invoice discounting rarely fits a shop. Shoppers pay at the till, so there are no invoices waiting to be paid. It may fit if you also sell to other businesses on credit terms.
Card-split or fixed?
A merchant cash advance can be repaid two ways.
With card-split repayments, a set share of your card takings goes to the funder until the agreed total is paid. A slow week means a smaller collection. SASFA's Code (2018) describes this version as a purchase of future card receivables, not a loan.
With fixed repayments, the same amount comes off on set days, daily or weekly. It's easy to plan around, but it doesn't drop in a quiet month. Each funder sets out a fixed-repayment advance differently, and the agreement states its legal structure, so read it before you accept.
For a shop with a big festive season and a quiet January, that difference matters. See festive season stock.
If you sell online
An online store gets paid through a payment gateway or a marketplace, not a card machine in the shop. A card-split advance is built around card takings, so ask any funder how it treats gateway or marketplace payouts before you apply. Working capital may be worth asking about too.
Card machine advances
Some card machine providers offer their own cash advance to their merchants, repaid as a percentage of daily sales. That can be convenient if you already use their machine. Compare it with other options in rand before you accept. Card machine advance compared explains the differences.
What funders usually want from a retailer
- Recent business bank statements showing regular takings. Funders ask for different periods. The NEF's application form, for example, asks for business bank statements for the past 12 months. We'll tell you what your funder wants.
- If you take cards, some funders look at your card sales history. One card machine provider, for example, only offers its own advance to merchants who have taken payments through it for 6 months or more.
- Company documents and the directors' ID.
We work with retailers, hospitality operators, contractors and transport businesses. We can help registered Pty Ltd companies and close corporations (CCs) that have traded for at least 12 months and need from R50,000. For a cash advance, we look for turnover of at least R600,000 a year.
Next step
Check your fit. It takes about 2 to 3 minutes and needs no documents to start.
Sources
- sasfa.net: 1.2 "The MCA is a discounted sale and purchase agreement, and not a loan
- sasfa.net: 3.3 "The MCA is suitable for all businesses that accept debit and credit card transactions, however, an affordability assessment is recommended for businesses with low profit margins
- stlm.gov.za: Business bank statements for the past twelve months
- support.yoco.help: a card machine provider's own advance
- ikhokha.com: another provider's advance