Merchant cash advance

Get funding without a deposit or asset and pay it back with your future sales.

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If your business receives the majority of its payments by card, you could benefit from a merchant cash advance. A merchant cash advance is similar to a business loan, except repayments are made through your future credit card and/or debit card sales.

What is a merchant cash advance?

A merchant cash advance is a type of loan available to businesses that have regular EFTPOS or credit card settlements. Unlike a regular business loan, with a merchant cash advance, you repay the loan with your future card transactions. There will also be a fee the lender will charge for providing the service. While easier to apply and qualify for, merchant cash advance loans can be more expensive.

This cash advance will be received in a lump sum. It can be used for various business purposes, including bridging gaps with cash flow. You can also use it to pay your staff, purchase stock, buy new equipment or make renovations.

How much you can borrow will depend on the lender and your business. In general, it can range from $10,000 to $1,000,000.

What are the fees associated with a merchant cash advance?

There are 2 fees you need to note when it comes to merchant cash advances:

  • Holdback. This is the amount of each transaction your company makes that will go to the lender as part of the repayment. This is usually 10-20% of the amount paid to you in a customer transaction.
  • Payback. This is the pre-agreed profit the lender will receive in addition to the loan repayment. This is typically 20-40% of the loan amount. This can vary depending on the amount borrowed as well as on the size and perceived security of your company.

Compare other business loan options

Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Swoop Finance Business Loan
$1,000
$100,000,000
1 to 20 years
Depending on your loan contract
Apply online and borrow between $1,000 and $100,000,000. Options for good and bad credit borrowers.
BOQ SME Recovery Loan Scheme Business Loan
$20,000
$5,000,000
Up to 10 years
No approval or administrative fees
This loan only applies to businesses eligible under the SME Recovery Loan Scheme. An Australian Government backed business loan to help businesses recover from the Coronavirus pandemic.
Zip Business Loan
$10,000
$500,000
Up to 5 years
No establishment fee
Borrow up to $500,000 with loan terms of up to 5 years. Flexible weekly, fortnightly and monthly repayment options available with no early repayment fees.
Lumi Unsecured Business Loan
$5,000
$300,000
3 months to 3 years
2.5% establishment fee
Apply for up to $300,000 from Lumi and benefit from short loan terms, no early repayment fees and once approved receive your funds in just one business day.
ebroker Business Loan
$5,000
$5,000,000
1 month to 30 years
$0 application fee
Small business loans available between $5,000 and $5,000,000. Get access to 70+ non-bank lenders on this independent platform.
Valiant Finance Business Loan Broker
$5,000
$1,000,000
3 months to 5 years
$0 application fee
A Business Lending Specialist from Valiant Finance can give you access to competitive business loans from over 70 lenders. Loans between $5,000 and $1 million are available. Request a call – your loan can be funded in 1 business day.
Moula Business Loan
$5,000
$250,000
1 to 2 years
2% Establishment fee
A loan of up to $250,000 that can be approved and funded within 24 hours. Available to businesses with 6+ months operating history and $5,000+ monthly sales.
Max Funding Unsecured Business Loan
$3,000
$30,000
1 month to 1 year
$0 application fee
An unsecured business loan from $3,000 that offers convenient pre-approval and no early repayment fees.
OnDeck Business Loans
$10,000
$250,000
6 months to 2 years
3% of loan amount
Apply for up to $250,000 and receive your approved funds in one business day. Minimum annual turnover of $100,000 and 1 year of trading history required.
ANZ Unsecured Business Loan
$10,000
No maximum amount
Up to 30 years
Subject to negotiation and will be detailed in your Letter of Offer
Apply for a loan from $10,000 with no security required and benefit from flexible repayment terms.
ANZ Secured Business Loan
$10,000
No maximum amount
Up to 30 years
Subject to negotiation and will be detailed in your Letter of Offer
Benefit from a low rate when you secure this loan with property and/or business assets. Loans from $10,000 available.
Prospa Business Loan
$5,000
$300,000
3 months to 3 years
3% origination fee
Small business loans are available from $5,000 - $300,000 on terms of up to 3 years. At least six months trading history and a monthly turnover from $6,000 is necessary.
Octet Trade Finance
$100,000
$10,000,000
1 month to 2 years
Transaction fee 2.5%
Access a line of credit to pay suppliers in over 65 countries. Borrow from $200,000 up to $7 million.
Westpac Business Loan
$20,000
$3,000,000
1 to 30 years
$0 application fee
Purchase a new vehicle, equipment or support your cash flow with a business finance solution from Westpac.
ANZ Business Loan under the Government SME Recovery Loan Scheme
$5,000,000
Up to 10 years
No approval or administrative fees
This loan only applies to businesses eligible under the SME Recovery Loan Scheme. Bounce back from lockdowns with a loan of up to $5,000,000 with this Australian government backed business loan. Variable rates between 2.49% p.a. and 2.99% p.a.
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If your business has a few outstanding invoices, invoice financing can help manage your cash flow and get access to funds you need. It's a type of business loan that is secured by the unpaid invoices and comes with reduced risk, no asset requirements or interest payments.
Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Waddle Invoice Finance
$10,000
$4,000,000
From 1 month
$0
Apply to borrow up to $4 million against your unpaid invoices and receive your approved funds within 48 hours.
Timelio Invoice Finance
$10,000
$100,000,000
Up to 4 months
$0
Get up to 100% of the value of your invoices without having to wait for customer payments, and with no minimum turnover or operating history required.
Thornmoney Invoice Finance
$10,000
$5,000,000
0.5% to 1.25% drawdown fee
You'll receive a rate tailored to you, and have up to 90% of your invoices funded. A 0.5% p.a. to 1% p.a. establishment fee applies, however this will be waived if you apply through Finder until 31 March 2022.
ScotPac Invoice Finance
$10,000
$150,000,000
From 1 year
No set amount
Improve your business cash flow by financing your outstanding invoices. No minimum trading history required, but minimum 12 - month term and $10,000 in invoices.
ScotPac Selective Invoice Finance
$10,000
$1,000,000
1 to 3 months
$500
Finance your unpaid invoices on demand with terms of 1 - 3 months. 95% of invoice is paid upfront, with no minimum trading history required.
Earlypay Invoice Finance
$50,000
$15,000,000
From 1 month
No set amount
Access a revolving line of credit that grows in line with your accounts receivable. Funding available from $50,000 to $15,000,000+.
Octet Invoice Finance
$100,000
$10,000,000
1 month to 2 years
No Set Amount
Convert up to 85% of your company's receivables into cash flow. The value of your receivables need to be worth at least $250,000 to be eligible.
Earlypay Trade Finance
$20,000
$15,000,000
1 month to 15 years
No set amount
Get finance for 100% of your outstanding supplier invoices. Borrow from $20,000 to $15,000,000 with Earlypay.
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What are the pros and cons of a merchant cash advance?

Pros

  • Quick and efficient. Business loans can take months to be approved, but you can get quick funding with a merchant cash advance. It will take a few days or weeks to receive funding.
  • No assets required. You don’t need to provide business or personal assets as security for the loan. The funds are secured against your transactions instead.
  • Easy to qualify. Your credit score won’t always play a role. In some cases, credit checks won’t be needed, especially for smaller amounts. The lender will consider your ability to repay the loan more than your credit score.
  • Repayment flexibility. How much you have to repay isn’t fixed, and there isn’t a loan term either. Your repayments will depend on your income. This can be an advantage if sales are slow since your repayments will then reduce in line with your sales.

Cons

  • Costly. This type of advance can be more costly than traditional business loans. This is because it comes with high fixed fees.
  • Short terms. Merchant cash advance plans don’t last beyond 12 months.
  • Can be risky. It’s difficult to predict what your future sales will be, even with past sales information. If your business can no longer pay off the advance, you will need to find the funds for repayment elsewhere.

What should I consider before I apply?

  • How much you need to borrow. Merchant cash advances do not charge interest, but there are costs. Given that this type of advance can be expensive, it’s important to assess how much you need. Don’t ask for more than you need since you’ll be paying for that money too.
  • The payback rate and overall costs. Find out what the payback rate is. In some cases, it can be higher than the interest rate charged by standard business loans. This rate is also determined by how risky your business is. If the lender thinks your business is risky, chances are the rate is higher. This will increase the cost of your loan.
  • Short terms. The term for the advance won’t be beyond a year. This makes merchant cash advances a short-term solution. Keep in mind that you’ll have to repay the loan within this short term. If this makes you uncomfortable, consider a longer term solution.
  • Other funding solutions. While merchant cash advances are easier to access, there may be cheaper alternatives. It may be worthwhile shopping for alternatives to see if they may be easier on your finances.

Is my business eligible for a merchant cash advance?

While merchant cash advances are easier to qualify for than standard business loans, you still have to meet some criteria. These include the following:

  • Minimum income. The lender will have a minimum income requirement you will have to meet.
  • Regular EFTPOS/credit card settlements. This type of advance is only suitable if you have a high volume of card settlements.
  • Age of business. Some lenders may require your business to be operating for a certain amount of time. Depending on the lender, this can be 6 months or 1 year.
  • Active ABN or ACN. You’ll need an active Australian Business or Company Number to apply.

How can I apply for a merchant cash advance?

🤔 Work out how much you need to borrow and what you can afford.

🔎 Start comparing lenders and products. Don't forget to check all the fees and eligibility criteria.

✅ Select lender.

🖨️ Organise and prepare the required documentation. This will make the application process easier.

📱 Apply. Most lenders have their applications online.

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