The UK merchant cash advance market: size, growth, and trends
By Helm, Funding Specialist
- The UK MCA market has grown significantly since 2015
- The shift to card and contactless payments is a key growth driver
- Small businesses are increasingly turning away from traditional bank loans
- Technology has made the application and approval process faster
- The market is expected to continue growing as card usage increases
The merchant cash advance market in the UK has experienced significant growth over the past decade. What was once a niche funding product used primarily in the United States has become a mainstream option for UK businesses looking for fast, flexible capital.
This guide provides an overview of the UK MCA market, the factors driving its growth, and what the future looks like for this type of funding.
How the UK MCA market has grown
The UK merchant cash advance market began to gain traction around 2012 to 2015, following the financial crisis that made traditional bank lending harder to access for small businesses. Since then, the market has grown steadily year on year.
While exact market size figures are difficult to pin down because MCAs are not regulated in the same way as loans, industry estimates suggest that hundreds of millions of pounds are advanced to UK businesses each year through MCA providers.
Key drivers of growth
Several factors have contributed to the rapid growth of the MCA market in the UK.
- The shift from cash to card and contactless payments has massively increased the pool of eligible businesses
- Traditional bank lending has become harder to access for small businesses, with lengthy applications and high rejection rates
- Technology has streamlined the MCA application process, making it possible to get approved in hours rather than weeks
- Growing awareness of alternative finance options through online content and industry events
- The flexibility of MCA repayments appeals to businesses with variable or seasonal revenue
The impact of contactless payments
The growth of contactless and mobile payments has been one of the biggest drivers of the MCA market. As more businesses process a higher proportion of their sales by card, the pool of businesses that qualify for a merchant cash advance continues to expand.
Industries that were traditionally cash-heavy, such as market stalls, trade services, and small cafes, are now processing enough card revenue to qualify for an MCA.
Who is using MCAs in the UK?
Merchant cash advances are used across a wide range of industries. The most common sectors include:
- Hospitality: restaurants, pubs, cafes, and hotels
- Retail: high street shops, boutiques, and online stores
- Health and beauty: salons, spas, and dental practices
- Automotive: garages, MOT centres, and dealerships
- Professional services: veterinary practices, pharmacies, and clinics
Market trends to watch
The UK MCA market continues to evolve. Here are some trends that are shaping the industry.
- Integration with payment processors: some MCA providers are partnering directly with card terminal companies for seamless applications
- Data-driven underwriting: providers are using transaction data and open banking to make faster, more accurate funding decisions
- Increased competition: more providers entering the market is driving down costs and improving terms for businesses
- Regulation discussions: there is ongoing debate about whether MCAs should be brought under FCA regulation
- Sustainability: some providers are exploring green funding options tied to environmental improvements
The future of MCAs in the UK
The MCA market is expected to continue growing as card usage increases and more businesses seek alternatives to traditional bank lending. Improvements in technology, data analysis, and open banking are likely to make the application process even faster and more accessible.
As the market matures, businesses can expect more competitive rates, better terms, and a wider choice of providers.
Frequently asked questions
How big is the UK MCA market?
While exact figures are difficult to confirm, industry estimates suggest the UK MCA market is worth hundreds of millions of pounds annually and continues to grow year on year.
Are MCAs becoming more or less expensive?
Increased competition in the market has generally led to more competitive factor rates. However, costs vary between providers, so it is always worth comparing offers.
Will MCAs be regulated in the future?
There is ongoing discussion about bringing MCAs under FCA regulation. For now, they remain unregulated in the UK, but this could change as the market grows.
Is the MCA market sustainable?
Yes. The underlying driver, the shift to card payments, is a long-term structural change. As long as businesses process card transactions, there will be demand for MCAs.