Unsecured Short Term Business Loans

Business Cash Advance - Operational by March 2021

A Business cash advance, also known as a Merchant cash advance or PDQ loan, is a short term unsecured cash loaned to the businesses based on their Credit and debit card sales. This differs from conventional unsecured Business Loan, as there are no fixed monthly/Weekly payments to worry about, as a percentage of the money is repaid automatically every time you process a payment on your card machine.Basically the repayment of cash advance works on a split ratio, which is derived from the historical sales realised through debit/credit card. So a Business with healthy card sales could raise money for their requirements and can pay it back from their future sales.

An Operational Example

A Business cash advance lender will usually advance a capital amount equal to that of your monthly card sales turnover. A Merchant with more than £2500 monthly card sales is generally eligible. An agreed percentage, called split ratio which is usually around the range 10-20%, is then deducted from each of your future card sales to repay the loan.

Each time the business processes a sale through their merchant card machine, 90-80% of the revenue from the sale will go into your business bank account and 10-20% will transfer to the lender as repayment.Suppose a Merchant with monthly card sales of £5000 avails a business cash advance of £10,000 and agrees to repay £12,000 at a factor rate of 1.2. So If the split ratio is determined as 10%. Then each time a card sale happens, 10% of the sales goes towards the repayment of the loan and it continues until the entire £12,000 is repaid back.As there is no fixed loan period to pay back the amount, but still it is expected to liquidate based on the future sales happening similar to the historical sales.