Can you get a merchant cash advance with bad credit?
By Helm, Funding Specialists
- MCA providers focus on card transaction volume, not your personal credit score.
- A soft credit check is used during application, which does not affect your score.
- Consistent card sales of £10,000+ per month can outweigh a poor credit history.
- MCAs are one of the most accessible funding options for businesses with imperfect credit.
If your credit score is less than perfect, you have probably been turned down by banks and traditional finance providers. It is frustrating, especially when your business is trading well and generating consistent revenue.
The good news is that a merchant cash advance works differently. Your credit score is not the main factor in the decision.
Why credit scores matter less with MCAs
Traditional finance relies heavily on credit scores to assess risk. A low score signals to banks that you may not repay, so they decline the application.
MCA providers take a different view. Because repayments are automatically deducted as a percentage of your card transactions, the risk model is based on your card sales rather than your personal financial history. If your business processes consistent card payments, the provider has confidence that repayments will flow naturally.
What providers actually look at
Instead of focusing on your credit score, MCA providers assess:
- Your monthly card turnover (usually a minimum of £10,000)
- How long you have been trading (typically three to six months minimum)
- Consistency of your card transactions over recent months
- Whether your business has any active insolvency proceedings
Will applying affect my credit score?
Most MCA providers, including Helm, use a soft credit check during the application process. A soft check lets the provider see basic credit information without leaving a mark on your file.
This means applying for an MCA will not lower your credit score. This is a significant advantage if you are concerned about multiple hard searches from other finance applications.
What types of bad credit are acceptable?
Every provider has different criteria, but most MCA providers can work with businesses whose owners have:
- Low personal credit scores due to missed payments or defaults in the past
- County Court Judgments (CCJs) that have been satisfied
- Limited credit history due to being new to the country or having never borrowed
- Previous business failures, provided the current business is trading well
When bad credit might be a problem
While MCAs are more flexible than traditional finance, there are situations where even an MCA provider may decline an application:
- Active bankruptcy or insolvency proceedings
- Outstanding CCJs against the business that remain unsatisfied
- Very recent or ongoing fraud markers on your credit file
- Card sales that are too low or too inconsistent to support repayments
How to improve your chances
If you have bad credit and want to maximise your chances of approval, consider these steps:
- Build up at least three to six months of consistent card transaction history
- Ensure your card terminal is processing as many payments as possible
- Satisfy any outstanding CCJs before applying
- Apply with a provider that uses soft credit checks to avoid further damage to your score
- Be upfront about your credit situation. Providers appreciate honesty and can often work around it
Frequently asked questions
What credit score do I need for a merchant cash advance?
There is no minimum credit score for most MCA providers. Approval is based primarily on your card transaction volume. However, active bankruptcies or unsatisfied CCJs may affect your eligibility.
Can I get an MCA if I have been declined by a bank?
Yes. Many businesses that come to MCA providers have already been declined by banks. Because the eligibility criteria are different, a bank decline does not mean an MCA provider will also decline you.
Will an MCA help rebuild my credit score?
MCA repayments are not typically reported to credit reference agencies, so they will not directly improve your credit score. However, using the funds to grow your business and improve cash flow can help you manage other financial obligations that do affect your credit.
Is the cost higher if I have bad credit?
Your credit history may influence the factor rate you are offered, but it is not the only factor. Strong card sales and a solid trading history can offset a lower credit score and result in competitive pricing.