Merchant Cash Advance Loans are a short-term funding option designed to give businesses fast access to working capital. Funding and repayment are based on business revenue, making them an ideal solution for businesses with inconsistent or seasonal revenue cycles.

While approval is dependent on your business revenue, there are a few industries that frequently leverage Merchant Cash Advance Loans, including businesses in the retail, restaurant, hospitality, beauty, healthcare, automotive, trade, and e-commerce sectors.

In this article, we’ll explore why each of these industries is generally a good candidate for Merchant Cash Advance Loans and the factors lenders usually assess. These include revenue consistency, monthly turnover, existing borrowings, and trade history.

What Makes a Business a Good Candidate for a Merchant Cash Advance Loan?

Being a good candidate for a Merchant Cash Advance Loan often relies more on cash flow quality rather than the sector you’re in.

But they are ideal for businesses with strong credit card payment volume. After a business secures the funding, they make repayments to the lender via a percentage of their card machine sales. The percentage amount fluctuates based on the size of the sale.

The primary feature of Merchant Cash Advance Loans is repayment through future revenue rather than fixed instalments. It can be a manageable and risk-averse plan for SMEs that want to repay the loan as their business grows.

However, if you’re looking for the consistency of monthly repayments, other loan options may be more beneficial.

Now that we’ve briefly covered what makes a business a good candidate for Merchant Cash Advance Loans, let’s explore which industries and sectors frequently use this financing option.

Sectors That Commonly Qualify for Merchant Cash Advance?

Now that we’ve briefly covered what makes a business a good candidate for Merchant Cash Advance Loans, let’s explore which industries and sectors frequently use this financing option.

Retail Businesses

Retail businesses make great candidates for this Merchant Cash Advance Loans because of frequent customer transactions, predictable sales cycles, and seasonal opportunities. Independent shops, convenience stores, clothing retailers, and home and garden centres are a few examples of retail businesses that use this type of funding.

Restaurants, Cafés and Takeaways

Restaurants, cafés, and takeaways often qualify for Merchant Cash Advance Loans because of their high card transaction volume, inventory purchasing needs, staffing fluctuations, and equipment replacement needs. These loans can help bridge quieter trading periods by providing capital to pay for ordinary and one-off business expenses.

Hospitality Businesses

Many hospitality businesses face seasonal demand. Not to mention that renovation funding and marketing usually occur before demand kicks off for the season. This cash flow mismatch makes Merchant Cash Advance Loans a viable option.

For example, in April, Airbnb occupancy increases to between 65% and 80%, compared to January, which can have an average occupancy as low as 40%. Hotels, guest houses, event venues, and holiday accommodations are a few businesses that benefit from this type of business loan.

Beauty, Wellness, and Personal Care

Hair salons, barbers, nail salons, spas, and beauty clinics are good candidates for Merchant Cash Advance Loans. For one, appointment-based income matches the revenue-based repayment terms of these loans. They could be the right financing solution if your beauty, wellness, or personal care business needs to make equipment upgrades or pursue expansion opportunities.

For the best financial guidance, apply for a business loan with Crispcap. It won’t affect your credit rating and you could secure business finance up to £500,000.

Healthcare and Professional Practices

The healthcare and professional practices sectors face payment delays, especially from insurance providers. Dental clinics, opticians, physiotherapy clinics, and veterinary practices all might have predictable customer demand from appointments scheduled months in advance. However, actually receiving payments for services rendered can take months. If funds are needed to purchase specialist equipment or grow the practice in general, Merchant Cash Advance Loans can be a great option.

Automotive Businesses

Garages, MOT centres, vehicle repair shops, car valet businesses, and other companies in the automotive industry can use Merchant Cash Advance Loans to purchase new tools, increase parts inventory, or make workshop improvements. These upgrades and improvements can increase revenue, which is the basis for the loan’s repayment plan.

Trades and Home Services

Trade and home services, like electricians, plumbers, builders, roofing companies, and landscaping businesses, often face seasonal demand. For example, these businesses see an uptick in demand during spring and summer when home projects and large construction projects begin. Repeat commercial contracts and invoice income can support eligibility even if current revenue or card payments are temporarily lower.

E-commerce Businesses

Online retailers, marketplace sellers, and direct-to-consumer brands face seasonal demand, with the peak busy season being around the holidays. However, preparation for the holiday rush starts months in advance, including inventory purchasing and creating advertising campaigns. Merchant Cash Advance Loans can support the financial cost of getting ready for seasonal demand.

Can Seasonal Businesses Still Be Approved?

Despite what you might believe, seasonal businesses can still be approved for these business loans.

Businesses that are driven by events or tourism, like summer destination hot spots, or specific holidays, like Christmas retailers, can still take out a Merchant Cash Advance Loan. Instead of looking at current revenue or contracts, lenders may assess historical revenue trends or future bookings to gauge the entire picture of your expected revenue.

Factors That May Influence Approval Across Any Sector

Rather than looking at the typical characteristics of your industry, lenders assess criteria in relation to your specific business. These factors include:

• Existing Borrowing Commitments – What existing loans and borrowings does your business currently have? What is the impact of these payments on your cash flow?

• Business Trading History – How long has your business been active? Are you a new startup, or do you have decades of history?

• Customer Payment Methods – How do customers pay? Do they pay on time?

• Overall Affordability – How will the merchant cash advance impact your financial stability? Will it overleverage your business or fit into your cash flow?

The industry you operate in is just one part of a broader risk assessment rather than the deciding factor.

Conclusion

Merchant Cash Advance Loans aren’t limited to the sectors on this list. In fact, most businesses that use a card machine and have high monthly turnover or expected revenue could utilise the loan. Strong, reliable revenue matters more than the type of business.

If you’re interested in a Merchant Cash Advance loan, get in touch with Crispcap’s team and check your eligibility. The application process is only 30 seconds long and it won’t affect your credit score.