Merchant funding in the UK: the complete guide
By Helm, Funding Specialist
- Merchant funding is repaid through your daily card transactions
- It is one of the fastest forms of business finance in the UK
- No personal guarantee or collateral required
- Approval is based on card revenue, not credit scores
- Most businesses are funded within 24 to 48 hours
Merchant funding is a broad term covering any form of business finance that is linked to your card payment revenue. The most common form is a merchant cash advance, where you receive a lump sum and repay it through a percentage of your daily card sales.
This guide provides a complete overview of merchant funding in the UK, helping you understand how it works and whether it is the right option for your business.
How merchant funding works
The process is straightforward:
- You apply with your card processing data
- The provider assesses your monthly card revenue
- You receive an offer with a clear total repayment amount
- Funds are deposited into your account within 24 to 48 hours
- Repayments are deducted automatically from daily card sales
Types of merchant funding
Several products fall under the merchant funding umbrella.
| Type | How It Works | Repayment |
|---|---|---|
| Merchant cash advance | Lump sum, repaid via card sales | % of daily card revenue |
| Merchant loan | Loan agreement, card-based repayment | % of daily card revenue |
| Card machine loan | Funding against card terminal revenue | % of daily card revenue |
| Revenue-based finance | Funding based on total revenue | % of monthly revenue |
Who qualifies for merchant funding?
If your business processes card payments, you likely qualify.
- UK-registered business (any structure)
- At least 3 months of card processing history
- Minimum £10,000/month in card transactions
- Any card terminal provider accepted
- No minimum credit score required
What does merchant funding cost?
Costs are expressed as factor rates, typically 1.15 to 1.50. A factor rate of 1.25 on a £10,000 advance means you repay £12,500 in total. The cost is fixed regardless of how quickly you repay.
Merchant funding vs bank loans
The key differences:
| Feature | Merchant Funding | Bank Loan |
|---|---|---|
| Speed | 24 to 48 hours | 2 to 8 weeks |
| Repayment | Flexible, revenue-based | Fixed monthly |
| Collateral | None | Often required |
| Credit check | Soft check | Full check |
| Approval rate | High | Lower for SMEs |
Frequently asked questions
Is merchant funding the same as a merchant cash advance?
Merchant cash advance is the most common form of merchant funding. The terms are often used interchangeably.
How quickly can I get merchant funding?
Most providers fund within 24 to 48 hours of a complete application.
Can I get merchant funding with bad credit?
Yes. Approval is based on your card revenue, not your credit score.
How much can I access?
Typically 1 to 1.5 times your monthly card revenue, up to £300,000.