A business cash advance essentially works by a company exchanging their future sales for an immediate lump sum of money. The provider then takes a fixed percentage from their daily credit & debit card transactions until the advance is paid back in full.
Businesses with a consistent stream of credit or debit card sales, such as retail or hospitality establishments, are often the ones who can take advantage of cash advances. The main benefit is that funds can be quickly acquired, generally within a few days. However, it’s important to check if other loan options fit your needs better, due to the comparatively high interest rates and fees tied to an advance.
If your business has been trading for at least 6 months and is receiving a minimum monthly income specified by your financier via card transactions, it will qualify for a business cash advance.
A merchant ID number (MID) is the number attached to a processing account, i.e. to Lloyds / Barclays / Worldpay. It is similar to an account number on a bank account and is typically required to process credit or debit card transactions.
Businesses need a merchant ID to repay their loan because of the way business cash advances are settled, typically through the use of a card terminal that is linked with the cash advance provider. Without a merchant ID loan terms cannot be fulfilled.
The factor rate of a business cash advance is a calculation that determines the total cost of your loan – For example, a factor of 1.2 on an advance of £10,000 = £10,000 x 1.2 = £12,000. The £12,000 will be the total your business is required to pay back. The factor rate is fixed so the price of repayments do not fluctuate like interest rates.
The split % of a business cash advance is the amount each individual card sale repays to Nucleus, i.e. 20%. This means 20% of the customers daily card transactions will be sent to Nucleus’s bank account for repayment. For Clarity: Every £1 your business receives, Nucleus will receive 20 pence of the sale until your loan is paid off.
A card processor / acquirer is the financial institution that is responsible for keeping a merchant’s account in order to process card transactions. The main ones are, Worldpay, Lloyds/Cardnet, FDMS/First Data, Barclaycard, Elavon, HSBC/Global Payments, AIB. – They are necessary in order to access a business cash advance.
The business cash advance sales & purchase agreement (SPA) states the terms of the loan agreement and is signed by the director / sole trader of the business. This confirms that Nucleus will have control of their card receivables throughout the contract.
The guarantee and indemnity form of a business cash advance is the contract that the business’s personal guarantor(s) sign. It confirms that if the business does not / cannot repay their loan, the personal guarantor(s) will personally make any outstanding repayments.
The mandate form of a business cash advance is signed and completed for each merchant ID number (MID) by the customer. It instructs the card processor (i.e. Worldpay) to divert the card terminal revenue into the trust account you are using to repay your financier.
These statements are monthly breakdowns of the revenue coming through each merchant ID number. For example, October 2022’s statement may show the business took 20 transactions which totalled £10,000, in turn, the calculations of repayments for your business cash advance agreement can be made.
If your business has multiple merchant ID (MID) numbers, they will sometimes be grouped together under the ‘head MID / HQ’. Any Merchant ID numbers that sit under the Head MID / HQ are known as ‘outlets’.
We needed a fresh approach and a lender thatunderstood our business. We put the business out to anumber of people and it became very obvious to usquickly that Nucleus was a really good fit for ourbusi…
“Thanks to Nucleus we’ve been able to employ more people, take on more work and are now turning over £400,000 a month. We are profitable once again and this is crucial to the company….
“Thanks to Nucleus, I have the funding I need to expand my business and offer a better service to my customers. Paul and his team were very easy to work with.”…
“We’d heard that Nucleus were flexible and reliable, and we needed a lender who would be able to provide a variety of different finance types – so we set up a meeting”…
We are pleased to partner with Nucleus and very excited about their new product range: being able to work so closely with our lender, allows our clients to benefit from seamless funding solutions….
Nucleus demonstrated a detailed understanding of our industry, and how to fund contractual debt….
I couldn’t believe it when Nucleus said they could do it in 7 days! Their competitive pricing and level and speed of service beats our bank hands down….
“Nucleus has been fantastic to work with: the team is very flexible and proactive, and takes the time to fully understand our business needs – ultimately Nucleus ensures we get paid on time.” …
“a supportive lender that understood the urgency.” …
Importantly Nucleus were very supportive and personal. They regularly reviewed what we needed and helped with any restrictions….
Nucleus offered a flexible solution that allows us to have other sources of funding where appropriate….
I would recommend working with them to other business owners, the team is great….
As a lender Nucleus are very good. What they offered, I’d definitely do it again it’s helped my business move forward….
A Business Cash Advance from Nucleus has allowed us to improve our business, generating more first-time customers and increasing the number of customers who return time and time again….
The customer is really happy; I’m very happy; we are all very happy. The whole process was all very simple and once the offer was out, it was completed within a couple of weeks. …
Our experience with Nucleus was excellent. Jo was really helpful, really fast and I was actually surprised at the speed of it all….
It is evident we are able to support SMEs with their funding needs and we hope to help many other businesses just like this one in the future too….
I always recommend Nucleus for other businessesbecause we had a really good result for what weneeded. BCA makes it easy how we pay back, andwe don’t have to worry about a big amount in theend of the m…
We are pleased to support this company in delivering on its growth ambitions. …
We are pleased to support this company in delivering on its growth ambitions….
We’re thrilled to help this awesome, family-run bakery through the trying Covid period and beyond….
Working with Nucleus was excellent. Rex was very calm and helpful throughout. The process was quick, efficient and Nucleus provided support as we required it and to our business demand. Most of the pr…