Merchant Cash Advance

One of the ways of securing a small business loan in South Africa is through a merchant cash advance.  Using this form of finance, the business sells its future turnover and a specific rate to a 3rd party. The funds accessible is strictly linked to the amounts of turnover generated in the company.

By using this type of finance, you will always make sure that the amount raised can be serviced on the daily repayments to the lender.  The business will be overexposed or overly geared.  This prevents future cash flow problems. The benefit of using this form of finance above any of the mainstream banks are the less complicated credit application.  In most cases, funds can be raised within 72 hours.

This type of finance is narrowed to a few selected industries, because of the nature of this.  The following sectors can apply for merchant cash advance:

  • Retail
  • Hospitality (especially restaurants)
  • Health & Beauty.

Some of the further requirements are the following:

  • The business must trade-in a Company (Pty Ltd) or a Closed Corporation (CC) and may not be a sole proprietor.
  • At least six months trading period. This will allow the funder to access the monthly turnover of the business.
  • The turnover must be at least R 200,000 per month.

To assist you in making sure your merchant cash advance is stress-free and smooth sailing, we compiled a checklist for you below:

  • The latest financial statements.
  • If the business has not traded for a full fiscal year, yet the management statements for at least six months need to be provided.
  • Bank statements of the business account for the last six months.
  • Company registration documents.
  • Copies of IDs of all directors.

We trust this checklist will assist you with your finance application.