Can startups get a merchant cash advance?
By Helm, Business Funding Specialists
- Most providers require a minimum of three to six months of card transaction history
- Strong and consistent card revenue matters more than how long you have been trading
- Pre-revenue startups will not qualify until they have built up transaction data
- Some providers specialise in working with newer businesses
Starting a business is expensive. Whether you need to fit out premises, buy stock, or invest in marketing, the early months demand capital that you may not yet be generating. A merchant cash advance can help, but there are some requirements you need to meet first.
The short answer is yes, startups can get a merchant cash advance, but only once they have started processing card transactions consistently.
Minimum trading requirements
Merchant cash advance providers base their decisions on your card transaction history. Without that data, they have no way to assess how much to offer or whether you can sustain the repayment percentage.
- Most providers require three to six months of card processing history
- A few providers will consider businesses with as little as two months of data
- You will typically need to show a minimum of £10,000 per month in card transactions
- Consistency of revenue is as important as the total amount
What if you are pre-revenue?
If you have not yet started trading or are not yet processing card payments, a merchant cash advance is not available to you at this stage. The product relies on existing card transaction data for both the application assessment and the repayment mechanism.
In this situation, you may want to explore other options such as startup loans, grants, or personal savings until you have built up enough trading data to apply.
Building your eligibility
If you are a new business working towards qualifying for a merchant cash advance, there are several things you can do to strengthen your position.
- Start accepting card payments from day one to build your transaction history
- Encourage card payments over cash to increase your recorded revenue
- Keep your card processing statements organised and accessible
- Maintain consistent trading patterns rather than sporadic bursts of activity
- Choose a card terminal provider that is widely recognised by MCA providers
How much can a startup borrow?
For newer businesses, the advance amount will typically be more conservative than for established businesses. Providers may offer 50% to 100% of your monthly card revenue initially, with the option to top up once you have built a positive repayment history.
For example, if your startup is processing £8,000 per month in card transactions after three months of trading, you might be offered an advance of £4,000 to £8,000.
Advantages of an MCA for startups
For startups that do qualify, a merchant cash advance offers several advantages over traditional funding.
- No business plan or financial projections required
- No personal guarantee or property security needed
- Repayments flex with your revenue, which is crucial during unpredictable early months
- Fast access to funds when timing matters
- Builds a borrowing relationship for larger advances in the future
Frequently asked questions
How soon after starting a business can I apply?
Most providers require three to six months of card transaction history. Some may consider applications after just two months if the transaction volume is strong and consistent.
Do startups pay higher rates?
Newer businesses may be offered slightly higher factor rates because they represent a higher risk to the provider. As you build a positive repayment history, rates typically improve on subsequent advances.
Can I get a startup loan and an MCA at the same time?
Technically yes, but you need to ensure the combined repayment obligations are manageable. Discuss your existing commitments with any provider before applying.
What alternatives exist for pre-revenue startups?
Pre-revenue businesses can explore government-backed startup loans, small business grants, crowdfunding, angel investment, or personal savings as initial funding sources.