If you are running, or starting up a small or medium-sized enterprise, you will be aware that one of the most immediate and important challenges facing you will be acquiring funding. But it’s not as simple as just asking someone for some money – would that it was! With nearly five million small businesses operating in the UK, there’s a lot of competition for that money. Even before you make your approach to a lender, you have to do a lot of work to find out which kind of funding is the best for you, taking into account the needs of your business as well as how you plan to pay it back, because that’s one thing your lender will be very keen to find out!
At SME Funding UK we are here to help, offering whole of market solutions to the problem of finding funding, based on which kind of plan will suit your business needs. Let’s take a look at merchant cash advances, for example.
A merchant cash advance is particularly good if you are running a retail operation. Simply put, you borrow a lump sum with the agreement that a percentage of each credit card transaction goes towards paying off your loan. This has the advantage that it automatically scales your repayments depending on how well your business is doing- in good periods, your transactions are larger and therefore you pay more back. In lean periods you end up paying less.
However, there are, as always, drawbacks and potential pitfalls to take into account.
Key among these is the fact that due to not being classified as a loan, a merchant cash advance is not covered by loan regulation, meaning unscrupulous operators can take advantage. But when approached carefully, they can be an effective and flexible way of getting funding, and as a result they are becoming increasingly popular. According to a June 2018 report from This Is Money, PayPal has seen an increase of 56 percent in cash advances issued through the platform over twelve months, reaching a total of over £625 million.
If you’re interested in getting on the ride, and want sensible, expert advice on whether this, or any other form of funding is suitable for your business, contact us today at SME funding UK.
Remember, SME funding UK provides a guiding light through the maze of different funding options for UK SMEs. With access to over 150 responsible lenders, our team are dedicated to finding the very best deal for our clients.
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Please note SME funding UK Ltd are brokers and not a direct lender.