Merchant loans in the UK: everything you need to know
By Helm, Funding Specialist
- Merchant loans are widely available across the UK
- They are popular with hospitality, retail, and service businesses
- The UK market has grown significantly since 2015
- Repayments are tied to your card transaction volume
- Most providers can fund within 24 to 48 hours
Merchant loans have become one of the most popular forms of alternative business finance in the UK. As card payments have grown to dominate retail and service transactions, more businesses than ever can access funding based on their card revenue.
This guide provides a complete overview of the UK merchant loan market, helping you understand how it works, what it costs, and whether it is the right option for your business.
The UK merchant loan market
The UK merchant loan market has expanded rapidly over the past decade. Driven by the growth of card and contactless payments, the shift away from traditional bank lending for small businesses, and advances in financial technology, the sector now serves thousands of UK businesses each year.
Unlike traditional bank loans, merchant loans are designed for speed and flexibility. Most applications are processed within hours, and funds can reach your account the same day or the next business day.
How UK merchant loans work
A UK merchant loan gives you a lump sum of capital, repaid through a fixed percentage of your daily card transactions. The process is simple:
- You apply with a provider, sharing your card processing data
- The provider assesses your monthly card revenue and offers terms
- You receive your funds, typically within 24 to 48 hours
- Repayments are deducted automatically from your daily card settlements
- The loan is repaid over 3 to 12 months, depending on your card volume
Who uses merchant loans in the UK?
Merchant loans are used by businesses across virtually every sector that processes card payments.
- Restaurants, cafes, pubs, and bars
- Retail shops and high street stores
- Hair and beauty salons
- Hotels, B&Bs, and guest houses
- Dental, medical, and veterinary practices
- Garages, auto repair shops, and MOT centres
- Food trucks and takeaway businesses
- Ecommerce stores with online card payments
UK eligibility requirements
To qualify for a merchant loan in the UK, you typically need:
- A UK-registered business (limited company, sole trader, or partnership)
- At least three months of trading history with card payments
- A minimum of £10,000 per month in card transactions
- An active card terminal, mobile reader, or online payment gateway
How much do UK merchant loans cost?
Costs vary between providers and depend on your business profile, card revenue, and the amount you borrow. Typical costs range from 15 to 40 percent of the amount borrowed.
The total repayment amount is usually agreed upfront, so there are no surprises. Always ask for the total repayment figure before committing to any provider.
How to apply for a merchant loan in the UK
Applying for a merchant loan is straightforward. Most UK providers offer online applications that take under 30 minutes.
- Gather your card processing statements for the last 3 to 6 months
- Have your business bank statements ready
- Complete the provider's online application form
- Submit your documents for review
- Receive your offer, usually within 24 hours
- Sign the agreement and receive your funds
Choosing a UK merchant loan provider
When comparing UK merchant loan providers, focus on these factors:
- The total repayment amount, not just the advance size
- The repayment percentage and its impact on your daily cash flow
- Transparency of fees and terms
- Speed of funding
- Customer reviews on Trustpilot and Google
- Whether they specialise in your business sector
Frequently asked questions
Are merchant loans regulated in the UK?
It depends on the structure. Some merchant loans are regulated by the FCA, while merchant cash advances (a closely related product) are generally unregulated. Check with your provider.
How quickly can I get a merchant loan in the UK?
Most UK providers can approve and fund a merchant loan within 24 to 48 hours. Some offer same-day funding for applications completed early in the day.
Do I need a UK business bank account?
A business bank account is preferred, but sole traders using a personal account for business may still qualify. Check with your provider.
Can I get a merchant loan if I am a new business?
You typically need at least three months of card transaction history. Brand new businesses without this track record may need to wait.