The qualifying tests every funder applies
Whatever the funder and whatever the branding, the assessment reduces to a single question: how confidently can the amount purchased be recovered from your daily card sales without leaving the business unable to trade. Everything on the checklist below exists to answer part of that.
- Card processing history. Usually a minimum of three months, evidenced by merchant statements from your acquirer. Longer records produce better terms.
- Monthly card turnover. Roughly £2,500 a month is the common working floor, because smaller volumes cannot deliver an advance in a sensible period.
- Consistency of takings. A stable or seasonal-but-explicable pattern underwrites well. Erratic takings with no explanation do not.
- UK-based trading business. A limited company, a sole trader or a partnership actually trading in the United Kingdom and taking card payments.
- An acceptable sector. Retail, hospitality and personal services are core territory. Some trades are declined regardless of turnover.
- No current distress. Live winding-up petitions, active insolvency processes or undisclosed arrears will stop an application.
What is absent from that list matters as much as what is on it. There is no requirement for property, for a minimum credit score, for two years of filed accounts, or for a business plan. That is the whole point of the product: it is designed for businesses whose strength is their daily trade rather than their balance sheet.
Card turnover thresholds and how long you need to have processed
Two numbers do most of the qualifying work, and both are worth understanding precisely rather than approximately.
The first is processing history. Three months is the common minimum, though a handful of funders will look at two where the takings are strong and the sector is one they know. Six months is where terms begin to improve, and twelve months is where a business stops being priced as an unknown quantity. The reason is straightforward: the funder is projecting future card sales, and the confidence interval on that projection narrows with every extra month of data.
The second is monthly card turnover, where roughly £2,500 is the practical floor. Below that, a holdback of 10 or 15 percent collects too little each day to deliver a meaningful advance inside a reasonable window, so the economics fail for both parties rather than the funder simply being unwilling. A business at £1,200 a month in card takings is not a marginal case, it is outside the product.
Beyond the thresholds, funders read the shape of the record. Seasonality is not a problem when it is visible and explicable, and a funder that understands your trading year will set a holdback you can carry through the quiet months. What causes difficulty is volatility without a story: a month at £30,000 followed by two at £9,000, with nothing in the file to explain it. Funders size against the low points in that situation, which is why explaining the pattern up front usually produces a larger advance than leaving a credit team to guess.
Businesses at the short end of the history requirement should read our new business cash advance page, which deals specifically with what three to six months of data supports.
Paperwork to have ready before applying
Underwriting is generally quick, often a day or two, and the delay in most cases is document gathering rather than decision making. Having the file complete at the outset removes most of the waiting.
- Merchant statements. Three to six months from your card acquirer, twelve if you have them. These are the primary document and everything else is supporting.
- Business bank statements. Usually three to six months, used to confirm the settlements arriving and to see the wider cash position.
- Business details. Company registration number and registered address, or your trading name and address if you are unincorporated. VAT number where registered.
- Director or owner identification. Photographic identification and proof of address for anti-money-laundering purposes.
- Details of existing finance. Any current advance, loan or overdraft. This will be found anyway, and disclosure produces a better outcome than discovery.
- A short explanation where the data needs one. A closed month, a refit, a change of terminal provider, an adverse credit event and what happened afterwards.
The last item is the one businesses skip and the one that most improves terms. Underwriters are reading a set of numbers with no context attached, and a paragraph explaining an unusual quarter frequently changes a defensive offer into a sensible one. Where credit history is the issue, our bad credit merchant cash advance page covers what funders will and will not work around.
Business structure, directors and personal guarantees
The legal form you trade through changes both who will fund you and what you are signing, so it is worth separating the three main positions.
A limited company is the most straightforward case. Every funder in the market writes advances to companies, the agreement is unregulated commercial finance, and the company is the counterparty. Directors are often asked for a personal guarantee, particularly where the business is young, the advance is large relative to turnover, or the credit position is weak. A guarantee brings your own assets into scope, and it is a separate document worth reading properly rather than signing as a formality.
A sole trader is a narrower field. Some funders accept unincorporated businesses readily, some only above a certain advance size, and some decline them outright, because agreements with individuals can in some circumstances fall within the Consumer Credit Act. There is no company standing between you and the obligation, so liability is personal from the outset. That analysis is set out in full on our sole trader cash advance page.
A partnership of two or three individuals is generally treated much like a sole trader, with liability typically joint and several. A limited liability partnership is a body corporate and is treated as a company would be.
Across all three, funders check the directors or owners as well as the business: identification, address history, and usually a credit search. Adverse personal credit is rarely fatal on its own where trading is strong, but it is an input into pricing, and it weighs more heavily where a guarantee is being taken.
Sectors funders accept, and those they decline
Sector appetite is a real filter, and a business can meet every numerical test and still be declined because of what it does. The pattern is consistent across the market.
Core territory is any trade where card income is high, frequent and immediate. Restaurants, cafes, takeaways, pubs and bars, hair and beauty salons, barbers, independent retail, garages, veterinary practices, dental and cosmetic clinics, and ecommerce businesses processing through a gateway all sit comfortably here.
Harder cases include businesses where the card payment comes long before the service is delivered, such as travel agents and event organisers, because a funder collecting today's takings may be collecting money that has to be refunded later. The same applies to businesses with high chargeback rates or heavy deposit-taking. These are not automatic declines, but the panel narrows and the terms tighten.
Routinely declined categories include gambling, adult services, unlicensed financial services, debt collection and businesses trading primarily outside the United Kingdom. Firms whose income arrives by bank transfer against invoices, such as most trade contractors and professional services, are not declined so much as unsuited: there is very little card volume to purchase, and invoice finance or a term loan fits the cash flow better.
How much your takings will actually support
Once you qualify, the amount available follows a consistent rule of thumb: roughly one month of card turnover. A business processing £24,000 a month is generally looking at something near £24,000, with movement either way depending on the strength of the record.
The market as a whole runs from about £5,000 to £500,000. Where you land within that depends on the length of your processing history, the consistency of the takings, whether another advance is already running, and how much of your total turnover arrives by card. Only card sales are being purchased, so a business with half its income in cash is sized on the card half alone.
Cost is set as a factor rate rather than an interest rate: a multiplier fixed on day one. An advance of £20,000 at 1.25 means £25,000 is delivered in total, however long collection takes. Rates typically run from 1.1 to 1.5. Collection is a fixed holdback of daily card takings, typically 5 to 20 percent, with most agreements completing in four to eighteen months as trade allows. Before accepting any offer, it is worth taking the time to put the figures through a merchant cash advance calculator so the factor rate is expressed in pounds and the daily holdback is tested against a quiet month rather than an average one.
One structural point that costs businesses money: fragmented card volume shrinks offers. Takings split between two terminals and an online gateway can present as three small merchants rather than one solid one, and funders size against what they can see attributed to the business.
Qualifying here is commercial, not regulated
It is worth being precise about what you are qualifying for, because the language of eligibility usually belongs to lending and this is not lending.
An advance is a purchase of future receivables. A funder buys a defined amount of your future card sales at a discount and collects it as those sales occur. No money is lent, no interest accrues, and the agreement refers to a purchase price and a purchased amount rather than principal and a rate. That is why the criteria look nothing like a loan application: the funder is valuing an asset it is buying, not assessing your capacity to service debt.
Where the business is a limited company, the agreement is unregulated commercial finance and sits outside the Financial Conduct Authority's consumer credit perimeter. In practice that means no Consumer Credit Act rights, no statutory cooling-off period, no Section 75 protection and no automatic access to the Financial Ombudsman Service. Protection comes from the contract, from ordinary commercial law and from whatever conduct standards a funder has chosen to adopt, such as those published by the British Merchant Cash Advance Association.
The position differs for sole traders and small partnerships, whose agreements can in some circumstances fall within the Consumer Credit Act; ask the funder to confirm in writing whether it treats your agreement as regulated. We are an arranger and introducer, not a lender, and we are not authorised by the Financial Conduct Authority.
How we structure it
Every case begins the same way: merchant statements, for as long a period as exists. Before anything goes to a funder we work out what those statements will realistically support, which means looking at the split between card and cash, whether volume is fragmented across terminals or gateways, how the trading year moves, and whether the recent months are representative. That produces a defensible number, and starting from a defensible number is what stops an application collapsing halfway through when a credit team reaches a different conclusion.
We then decide which funders to approach rather than approaching all of them. Appetite varies by sector, by advance size, by legal structure and by tolerance for a short history, and a scattergun submission generates multiple hard searches and a set of offers that all price the same unexplained data defensively. Two or three well-matched funders, with the seasonality and any adverse history explained in writing up front, consistently produces better terms than a wider approach.
The negotiation we push on is the holdback rather than the headline rate, because the split percentage is what a business feels every trading day. Matt Lenzie reads each enquiry himself, tests the proposed split against the client's quietest recent month rather than the average, and where the conclusion is that an overdraft, asset finance or invoice finance fits better than an advance, says so. We are paid by the funder that writes the case, and we tell clients that before they decide anything.
Related
- Merchant cash advance lenders: who funds UK card-taking businesses
- A small business merchant cash advance, arranged against your card takings
- Merchant cash advance for sole traders and small partnerships
- Merchant cash advances for new and early-stage businesses
- Merchant cash advances with bad credit, and what no credit check really means
- Card terminal funding: raising money against your PDQ takings