• Updated: 16/10/2021
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Small Business Cash Advance

See our best lenders for Merchant Cash Advances or Invoice Finance

  • Swoop
  • Swoop
  • - Best platform to find top cash advance lenders
  • Capify
  • Capify
  • - Top lenderchoice with international reputation
  • Valiant
  • Valiant
  • - Good marketplace to find cash advance options

Best Small Business Cash Advance

1Swoop Funding

Swoop Funding is a fast-growing Irish company that recently commenced operations in Australia. The company bills itself as a virtual CFO as they help SMEs find the best solution for their business requirements.

Swoop funding has a lending platform that can connect you with a large network of funding providers. By providing details about your business and business needs, the platform uses an advanced matching algorithm to curate the right solutions for the unique requirements of the business and circumstance.

The amount you can borrow with a merchant cash advance amounts to roughly 100% of how much your business earns per month (expect between $9,000 and $900,000). Keep in mind, this will vary according to the lender you match with. Terms are 3 months to 5 years and have a factor rate between 1 and 1.5. Typically 10% of the daily card transactions are paid back.

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2Capify

Capify is one of the best choices for a merchant cash advance (MCA) due to its fast application process, generous funding amount and helpful repayment terms. One of the benefits of choosing Capify is that they access any branded card terminals for MCA. This means you can choose Tyro and any of the banks such as Westpac, ANZ, NAB and Suncorp.

To qualify for an MCA with Capify, your business must meet the following criteria

  • $15,000+ in monthly turnover
  • A minimum of EFTPOS/Credit Card settlements a month
  • 12+ months in business
  • Active ABN or ACN
  • Over 18 years of age
  • Australian Citizen or Permanent Resident

Your business can obtain an advance of $5,0000 to $500,000 and Capify allows a borrowing capacity of 150% of the monthly revenue. The repayment period is 3 to 12 months so an MCA with Capify is best as a short term solution.

Applications can be done online in under ten minutes. Advances under $75,000 do not need financials, which can speed up the approval process. Larger applications can still be approved and funded on the same day, just make sure you link your bank account with your application and allow Capify to perform a credit check.

Repayments apply a factor rate, which means a small amount is deducted from business earnings. These are done daily using direct debit.

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3Valiant Finance

Valiant Finance is an online business financing marketplace. It is a loan broker that has a lending platform that connects your business with over 100 products for finance from over 80 lenders.

The benefit of using Valiant Finance is that they spare you the need to find and research suitable lenders yourself. This is done through an algorithm that takes basic information, you provide to Valiant Finance about your business and then suggest suitable lenders that meet your needs.

While technology is a large part of helping you find lenders, Valiant Finance is also a customer service company. Once you apply for finance, expect a call from a lending specialist to help guide you through the loan application process.

Valiant Finance can help you find Merchant Cash Advances ranging from $5,000 to $400,000. Terms are generally 3 to 24 months with a cost of capital fee of around 1.1x to 1.4x. This means an advance of $100,000 will be $110,000 to $140,000.

Keep in mind that Valient Finance is connecting you with suitable lenders, so the above information is only a guide. Each lender has its own criteria so eligibility requirements may vary. Some lenders will do a credit check, while others will not give an advance if your business has bad credit.

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4Accrutus

Accrutus Capital has been around since 2007 and specialises in providing alternative capital solutions for SME businesses. One of these solutions is EFTPOS funding which is another term for a merchant cash advance.

With Accrutus you can get an unsecured advance of up to 90% of business sales but not exceeding $100k. The amount Accrutus will lend depends on the proven ability of the business to repay the advance. Assessment is based on credit score, advance terms, the industry of your business and any existing loans the business has.

To qualify for an advance you must meet the following eligibility criteria:

  • 9 months of trading
  • Minimum of 8-10 different customer deposits spread
  • Minimum business turnover of $10K per month
  • Require 6 months banking & merchant statements
  • Positive bank balance
  • Credit score above 500+ with paid defaults

No financials are required for loans under $70,000. Making Accrutus a suitable choice for a low doc advance. Loans over $70,000 should have 2 years of signed financials.

Loan terms are 3 to 18 months and the payback % is negotiated and deducted daily from future EFTPOS sales and sent straight to your bank account. Typical rates are based on your industry and range from 10% to 30%

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Best Small Business Cash Advance

When your business is in a need of finance, two of the most common ways to obtain capital is with either a business loan or a cash advance. While it is easy to assume taking on debt to obtain any type of funding means you are getting a loan, a cash advance is not a type of loan.

In this guide, we explain the differences between loans and cash advances and then look at the types of cash advances for small businesses.

What is a business loan and how do they work?


A loan is an amount you borrow from a lender, usually for a particular use. This capital can either be a lump sum amount or a line of credit and will have an agreed payback period for an amount of interest.

When it comes to business loans, you need to show the lender, you intended to use the capital for business purposes. In Australia, this may mean providing the lender with active ABN as part of the application process.

Regardless if the loan is a secured or is an unsecured business loan, a thorough application and basic check of the business finances is a requirement of the lender. Generally, if you have a poor credit score or lack cash flow then lenders will either not lend to you or charge higher interest rates.

Business loans follow a repayment term or schedule, which means you have to repay the loan regularly via instalments. Obviously, this means the longer the loan repayment term, the more your interest costs will be.


Key features of business loans

A business loan is made up of a few key features that distinguish it from other types of funding. 3 such features include:

  1. Your business borrows from a lender to fund a business need
  2. The business needs to show the lender they can repay the loan based on existing business finances and credit checks
  3. The business pays back the principal plus interest over a fixed period in instalments

Types of business loans can include

  1. Lump-sum term loans (sometimes called small business loans, short-term loans, working capital loans, unsecured business loans)
  2. Business overdrafts
  3. Business line of credit
  4. Asset loans

What is a cash advance and how do they work?

While traditional loans are based on an assessment of your business at a point in time for which you repay following a schedule, cash advances are based on and repaid using future revenue.

One example of advance is payday advance, which is a type of cash advance designed to help an individual person in an employed position cover temporary shortfalls in their bank account until their next salary. Business cash advances work in the same way but instead of being based on salary, are based on future sales or revenues.

Other common examples of a cash advance are merchant cash advance (MCA) and invoice finance. With a merchant cash advance the debt is repaid using future card sales while invoice finance relies on the payment of unpaid invoices.

How do business loans and business cash advances differ?

Traditional loans mean your business gets a lump sum at the start of the loan term and your business pays the principal plus interest on the principal until the cleared debt. This repayment follows a rigid schedule which means the business pays a certain amount at the end of a certain period. This amount can be fixed which means the amount that is paid always the same for each instalment or it can be variable which means the interest rate changes (often in line with the rates set by the reserve bank of Australia).

Much like a standard loan, a business cash advance is also a lump sum but your payments are tied to what you earn in future rather than the principal of an existing loan. This interest rate is always fixed at the start of the agreement. Since the interest rate is fixed, the amount of interest you pay is proportional to the revenue you are expecting.

As advances are different to loans, different terminology is applied. Loans have a ‘loan amount, cash advances have an ‘advance rate’.

Who is a business cash advances for?

Some businesses can benefit from an advance rather than a loan. Examples include:

Seasonal Businesses

Since the interest rate for a cash advance is in line with the revenue expected, this type of funding is a good choice for seasonal businesses. an advance is flexible as it is sensitive to the businesses turnover or expected income each pay period.

New Businesses

Cash advances can also be an option if you have a new business or is just starting out. This is because traditional loans (especially unsecured loans) require your business to have at least 3 to 6 months of trading history a minimum revenue per month. Since cash advances are based on future revenue, cash advances offer more flexibility.

Businesses that need funds without specific purpose

Another reason to consider an advance is you just need capital but don’t have a specific purpose for it. If you apply for a loan, banks in particular will want some form of assurance you are using the funds for a specific business purpose, so will ask how you plan to use the funds. Other lenders simply require an ABN and ACN number as proof the loan is for business purposes and you can use this loan any way that benefits the business.

Business to business (B2B) companies

If you invoice your clients at the completion of goods or services. invoice finance such as invoice factoring or discounting makes sense. Since you already have the invoices as proof of future income, you can use the invoice as security. The invoice finance provider will then buy the invoice off you giving you 80% to 95% of the invoices value in advance. Once the client pays the invoice, the financier will pay the remaining portion of the loan less fees.

Businesses that makes all revenue through card sales

Merchant cash advance is a good option for retailers since all sales are done through card terminals or EFTPOS transactions. Card sales through credit cards such as Visa, MasterCard and American Express or debit cards can be trace electronically. This means lenders can automate the payment process to repay the advance.

What is a Merchant Cash Advance

A Merchant Cash Advance is a finance option available for businesses such as retailers that make their revenue through card payments. This type of finance is also sometimes called a revenue loan or revenue based finance.

Funding for a merchant cash advance works by having the lender provide a lump sum of cash advance upfront which is then paid back through a percentage of the card sales the business makes. Since the business pays back the amount borrowed through turnover, it is not technically a loan but an advance.

The key aspect of a merchant cash advance is that your business must earn the bulk (if not all) of its revenue through EFTPOS and card purchases. Businesses that typically rely on these payment methods include retailers (both online and physical stores), restaurants, hospitality and tourism industries.

This form of repayment is very convenient for borrowers as payments can be electronically calculated and deducted from the business bank account based on daily, weekly or monthly sales. Best of all, the amount deducted is in line with the amount the business earns. When turnover is high, more will be deducted and when takings are low, less will be dedicated. Having such a flexible repayment plan ensures the business can maintain good cash flow after costs are paid.

Note: The above description of an MCA is the most common form of cash advance available with Australian businesses. However, another form of MCA can use fixed daily or weekly debits from your bank account. These types of MCAs use a factor rate rather than an annual percentage rate and are sometimes called automated clearing house (ACH) advances.

Advantages and disadvantages of merchant cash advances

Pros

  • Easy to approve – has low qualification, require little documentation
  • Provide finance fast
  • Does not require collateral
  • Uses fixed interest rates which means payments align with turnover
  • Higher turnover can lead to fast loan payment
  • Bad or poor credit may be ok since high credit score not usually required

Cons

  • One of the most expensive types of finance
  • Not a good option for long repayment terms
  • Cannot change terms of advance once agreed on
  • Can limit cash flow since payments are deducted from revenue
  • Not suitable for businesses that don’t rely solely on card payments
  • Lender may require you to use their preferred card machines

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