What is a merchant cash advance?
A merchant cash advance is a lump sum paid against your future card takings: you repay a fixed total, agreed upfront, through a percentage of every card sale until it is cleared. The fee is fixed but the time is not, so the faster you repay, the dearer it is in annual terms. It is not a loan, and the providers we checked all say it is not FCA regulated. On our worked example a £5,000 advance costs £1,000, which is about 50.9% a year in loan terms.
Provider terms checked 1 November 2026.
How it works, on a £5,000 a month shop
A shop takes £5,000 a month by card. It is offered £5,000, to be repaid as £6,000 through 15% of card sales. The quote is hypothetical: providers price each business individually and most publish no fee table.
- Fee: £6,000 − £5,000 = £1,000. Providers sometimes express this as a factor of 1.20 (£6,000 ÷ £5,000).
- Monthly repayment: £5,000 × 15% = £750.
- Time to repay: £6,000 ÷ £750 = 8 months.
- Annual equivalent: £5,000 repaid at £750 a month for 8 months is about 50.9% a year.
If sales run 20% lower, the same £1,000 fee is spread over about 10 months and the annual equivalent drops to about 41.5%. A quiet month of £3,000 means £450 goes to the provider instead of £750. That flexibility is the real benefit. The cost is that a busy season repays fastest, which is exactly when the advance is most expensive.
Published terms from UK providers
| Provider | Amount | Cost and repayment | Regulation and catches |
|---|---|---|---|
| Square Cash Advance | Based on your Square sales data, not your credit history | One fixed funding cost shown upfront, no interest; a percentage of every card sale until the balance is met; no monthly payments due | Not regulated by the FCA; no personal guarantee; for sole traders and partnerships that take payments with Square |
| YouLend | Up to £2,000,000 | No interest, a fixed fee (amount not published); repaid through a fixed percentage of sales | Merchant financing not FCA regulated; introducers may be paid a commission, typically a percentage of the fixed fee |
| Liberis | Not published | Fee not published; a minimum monthly amount of up to 3% of the total owed | Not authorised or regulated by the FCA, and the Financial Ombudsman Service cannot consider a complaint about it |
Card payment providers such as Square offer advances to their own customers; see payment provider cash advances for those. If you are offered one, ask for the fixed fee in pounds and the percentage of sales, then run the four steps above on your own takings, or use our MCA cost calculator.
When an advance makes sense, and when it does not
It can make sense for a short, specific need that pays for itself within a few months (a stock order, an equipment repair) when your card takings are steady and a bank cannot move in time.
Do not take one if:
- You need the money for more than a year. A term loan is built for that: Funding Circle lends £10,000 to £750,000 over 6 months to 6 years from 6.9% a year. See business loans compared and business loan interest rates.
- You already have an advance. Stacking two takes two cuts from the same sales; see MCA stacking.
- The problem is that costs are too high, not that cash is late. An advance makes that worse. Start with a free statement review of what your card machine charges.
- Your sales are mostly invoices, not cards. Look at invoice finance.
More on this: merchant cash advance vs bank loan, when not to take a merchant cash advance, refinancing an advance and government-backed loans, or bank business loans if you have traded long enough for one.
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Questions people ask
What is a merchant cash advance?
A merchant cash advance (MCA) is a lump sum paid to your business in exchange for a share of your future card takings. You repay a fixed total, agreed upfront, as a percentage of each card sale until it is cleared. Square describes it as one fixed funding cost shown upfront, no interest.
Is a merchant cash advance a loan?
No. Liberis describes its advance as a form of receivables finance, not a loan, and Square says its Cash Advance is not a credit product. In practice it does the same job as a short-term loan, so compare it with one on total cost.
Is a merchant cash advance regulated by the FCA?
No. Square Cash Advance is not regulated by the FCA; YouLend is FCA authorised as a payment institution, but its merchant financing is not regulated by the FCA; Liberis is not authorised or regulated by the FCA, and the Financial Ombudsman Service cannot consider a complaint about it. That means fewer protections if something goes wrong, so read the agreement before you sign.
How much can I get with a merchant cash advance?
It is sized on your card takings, so there is no fixed range. YouLend advertises up to £2,000,000; Square makes offers from your Square sales data, not your credit history, and typically wants typically at least £10,000 in card payments over the past 12 months, on 20 or more separate days.
What happens if my card sales drop?
Repayments fall with them, because you pay a percentage, but the total you owe does not change. Some providers set a floor: Liberis asks for a minimum monthly amount of up to 3% of the total owed. On our example a £6,000 balance means at least £180 a month, whatever you take.
Can I get a merchant cash advance with bad credit?
Often, because offers rest on sales rather than your credit file: Square's are based on your Square sales data, not your credit history. Being easier to get is not the same as being cheap, so price it against a loan first.
Can I have two merchant cash advances at once?
Even where a provider allows a second advance, two percentages coming off the same takings is how cash flow problems start. Capify, which lends rather than buys card sales, says it will refinance a competitor loan once more than 50% of it is repaid, and pays the other lender out first, and that it does not stack loans. See our guide to MCA stacking.
Sources
Every figure on this page comes from the lender's or scheme's own published page, read on 1 November 2026. Panel rate ranges come from our partner's lender-panel catalogue, checked 1 September 2026. We do not use comparison sites as sources.