Quick answer: A merchant cash advance (MCA) is funding repaid as a fixed percentage of a business’s future card or digital sales, rather than fixed monthly instalments — common among South African fintech lenders serving card-based retailers. For many SMEs, the underlying need an MCA meets — fast, flexible funding not tied to a rigid repayment date — is also met by an unsecured business loan or working capital facility, which is what New Heights Finance arranges through its lender panel.
Related: Unsecured business loans · Working capital loans
Key facts
| What it is | Funding repaid as a percentage of ongoing card/digital sales, not fixed instalments |
| Best suited to | Businesses with high, consistent card or digital payment turnover (retail, hospitality, e-commerce) |
| Repayment | Deducted automatically as a share of sales — slows in quiet periods, speeds up in busy ones |
| NHF’s role | Advises on and arranges unsecured or working-capital funding as an alternative route to the same cash-flow need |
What is a merchant cash advance?
A merchant cash advance is funding advanced against a business’s future card or digital payment turnover. Rather than a fixed loan repayment, the provider takes an agreed percentage of daily card sales (often via the same payment terminal or gateway the business already uses) until the advance, plus a fee, is repaid. It’s most common among South African fintech lenders serving retail, hospitality and e-commerce businesses with consistent card-based income.
How is a merchant cash advance different from a business loan?
The core difference is how repayment works. A business loan has a fixed instalment and a fixed term, regardless of how sales perform week to week. An MCA’s repayment moves with sales — you pay less in a slow week and more in a busy one — but the total amount owed doesn’t shrink just because trade is slow, so a prolonged downturn simply extends how long repayment takes.
Merchant cash advance vs unsecured business loan
| Merchant cash advance | Unsecured business loan | |
|---|---|---|
| Repayment | A percentage of daily card/digital sales | Fixed instalments over an agreed term |
| Based on | Card/payment turnover | Turnover and trading history broadly |
| Best for | High card-turnover retail/hospitality/e-commerce businesses | Most SMEs, regardless of payment mix |
| Cost structure | A factor rate, not an interest rate — can be harder to compare | A clear interest rate and term |
Is a merchant cash advance right for your business?
If most of your revenue runs through a card machine or online payment gateway and you want repayment that flexes automatically with sales, an MCA-style product may suit. If your income isn’t primarily card-based, or you’d rather have a clear, fixed repayment schedule you can budget around, an unsecured business loan or working capital loan is usually the more straightforward option — and is what New Heights Finance arranges through its panel of lenders.
What does a merchant cash advance cost?
MCAs are typically priced as a factor rate rather than a standard interest rate — for example, repaying 1.2 to 1.4 times the amount advanced. Because this isn’t expressed as an APR, it can be harder to compare directly against a loan’s interest rate. Always work out the total amount you’ll repay, not just the headline factor, before comparing options.
Can I get a merchant cash advance with bad credit?
MCA providers often weigh card turnover more heavily than credit score, which can make this type of funding accessible to some businesses a bank would decline. That doesn’t mean approval is guaranteed — criteria vary by provider, and a weak or inconsistent card-sales history can still count against an application.
FAQs
Is a merchant cash advance a loan?
Not technically — it’s usually structured as a sale of future receivables at a discount, rather than a loan, which means it isn’t regulated in the same way lending is. Read any agreement carefully before signing.
Does New Heights Finance offer merchant cash advances directly?
New Heights Finance, as a broker, focuses on arranging unsecured and working-capital funding through its lender panel. See unsecured business loans and working capital loans for the options NHF can help arrange.
What’s cheaper, an MCA or a business loan?
It depends on the factor rate versus the interest rate, and how quickly each is repaid — always compare the total repayment amount, not just the headline number.
Can a startup get a merchant cash advance?
Usually not — MCA providers typically need an established card or digital payment sales history to base the advance on, which a brand-new business won’t yet have.
What happens if my sales drop after taking an MCA?
Repayment is usually tied to a percentage of sales, so it slows down automatically. The total amount owed doesn’t reduce, though, so a prolonged downturn extends how long repayment takes rather than reducing what’s owed.
Not sure if an MCA or a business loan fits your business? Get in touch with New Heights Finance to talk through your options.