Merchant loans for small businesses: a practical guide
By Helm, Funding Specialist
- Merchant loans are designed for businesses that process card payments
- Small businesses can access between £10,000 and £300,000
- No business plan or financial projections required
- Repayments flex with your daily card revenue
- Ideal for businesses that need capital quickly
Running a small business means constantly balancing growth ambitions with limited resources. When you need capital, whether for stock, equipment, marketing, or expansion, traditional bank loans can be slow, demanding, and often result in rejection.
A merchant loan offers a practical alternative. If your business processes card payments, you can access funding based on your card revenue, with repayments that flex with your daily sales.
Why merchant loans suit small businesses
Small businesses face unique challenges when seeking finance. Merchant loans address many of these.
- No lengthy application forms or detailed business plans
- Approval based on card revenue, not credit score or assets
- Funding within 24 to 48 hours when you need it most
- Repayments that reduce automatically during quiet periods
- No personal guarantee putting your home or savings at risk
- Available to sole traders, partnerships, and limited companies
How much can a small business borrow?
The amount you can access depends on your monthly card revenue. Most providers offer between one and one-and-a-half times your monthly card turnover.
| Monthly Card Revenue | Typical Advance Range |
|---|---|
| £10,000 | £10,000 to £7,500 |
| £10,000 | £10,000 to £15,000 |
| £20,000 | £20,000 to £30,000 |
| £50,000 | £50,000 to £75,000 |
| £100,000+ | £100,000 to £150,000+ |
Common uses for small business merchant loans
Small business owners use merchant loans for a wide range of purposes. There are no restrictions on how you spend the funds.
- Purchasing stock or inventory ahead of busy periods
- Refurbishing or expanding your premises
- Buying new equipment or upgrading technology
- Hiring additional staff
- Funding marketing campaigns
- Covering cash flow gaps during seasonal slowdowns
- Launching new products or services
Small business eligibility
If you run a small business that processes card payments, you are likely eligible. The key requirements are:
- At least three months of card transaction history
- A minimum of £10,000 per month in card transactions
- A UK-registered business
- An active card terminal or payment gateway
Merchant loans vs other small business finance
Here is how merchant loans compare to other funding options commonly used by small businesses.
| Feature | Merchant Loan | Bank Loan | Business Credit Card |
|---|---|---|---|
| Speed | 24 to 48 hours | 2 to 8 weeks | 1 to 2 weeks |
| Collateral | None | Often required | None |
| Credit check | Soft check only | Full credit check | Full credit check |
| Repayment | % of card sales | Fixed monthly | Minimum monthly payment |
| Personal guarantee | Not required | Usually required | Not required |
| Maximum amount | Based on card revenue | Based on credit profile | Typically £10,000 to £25,000 |
Frequently asked questions
Can a sole trader get a merchant loan?
Yes. Sole traders are fully eligible as long as they process card payments and meet the minimum monthly threshold.
Do I need to provide accounts or tax returns?
No. Merchant loan applications are based on your card processing data, not your accounts or tax returns.
What if my business is seasonal?
Merchant loans are ideal for seasonal businesses because repayments automatically reduce during quieter months when your card revenue is lower.
Can I get a merchant loan alongside a bank overdraft?
Yes. A merchant loan does not typically affect your ability to maintain a bank overdraft, as it is a separate type of funding.