What is business cash advance

Whether you are running a shop, a café or a hair salon as a consumer business it can be difficult to find funders who understand your business and are able to provide the money you need.

A business cash advance may be the answer and could be an attractive option for firms like yours. In this guide we explain what a business cash advance is; what types of businesses use them; what it can be used to fund ,and how to apply for one through our partner, Liberis.

What is a business cash advance?

A business cash advance is not a business loan or an overdraft. Put simply, cash is advanced to your business based on your eligible card sales and in return for you selling a portion of your future card takings.

Some companies use cash advances to purchase stock and equipment or for refurbishment or repairs. Others use them to bridge a dip in cash flow or to fund unexpected costs. They can have advantages over more traditional business funding methods, such as speed, easier approval, more flexible fees and payments that respond to your level of card sales.

Who can use a business cash advance?

Businesses that accepts credit cards or debit cards can apply for a cash advance, but typical sectors that could benefit from them include:

  • Restaurants
  • Bars
  • Hotels and inns
  • Small retail outlets
  • Hair and beauty salons
  • Delicatessens or bakeries
  • Flower shops

What can you use a business cash advance for?

A business cash advance can be a useful option for any firm in need of funding for any legitimate business purpose. Here are a few real life examples of how a business cash advance has helped businesses succeed and grow:

1. Gear up for busy times

In October 2016, Chris Andrews of Blacks Cheese in Shropshire wanted to get ready for the Christmas rush. He used a business cash advance to stock up on inventory before his seasonal boost in sales. "It's a newer form of funding and it really does suit what small businesses want,” Chris says. “All finance should be done this way!"

2. Expand a thriving business

At The Robins Mill Farm Shop, business was booming. Proprietor Stephen Robins wanted to expand his family delicatessen, café, and gift shop by adding new lines of stock, a bakery, and a plant store. "We're a seasonal business in respect that for winter and the Christmas period everything is a lot bigger, so our advance gets paid off very quickly during the run-up.”

3. Stabilise uneven cashflow

With some businesses, it’s feast or famine. That’s the way things go at Val Hever Blinds, an award-winning interior firm in the West Midlands. “The banks wouldn’t work with us, so I thought I’d look into alternative finance,” says owner Val Hever. He finds the business cash advance model of funding works with his peaks and troughs. “So if we’re quiet we don’t have to pay back a lot; but if we’re busy - as we’re coming up to now - we take more card payments and can pay off our advance quickly,” Val says.

The Worldpay cash Advance – Worldpay Business Finance

Worldpay Business Finance is a business cash advance delivered by Liberis Limited*1, that simplifies and provides fast cash for Worldpay customers. The key was to provide funding which could be advanced against future card payments  in line with natural business rhythms, and not an arbitrary repayment schedule set forth by a bank.

This kind of funding builds on the natural relationship between the business and its payments provider. A trusted partner like Worldpay already has a longstanding history of supporting safe and simple merchant credit card transactions.

Worldpay

Worldpay typically processes more than 31 million transactions globally every day in the online, mobile, and in-store space. That’s about 400 transactions every second. We support more than 400,000 merchants in 146 countries and more than 300 payment methods2.

Liberis

Liberis is a financing provider with more than a decade of experience. They’ve helped thousands of companies’ access more than $3003 million in small business funding. They partnered with Worldpay in 2015 with the shared vision to create a quick and simple business funding source.

Worldpay Business Finance cash advances provided by Liberis have been made to thousands of companies. For eligible Worldpay customers, that means fast access to advances against future credit card sales that can be used for a variety of business needs.

Benefits of Worldpay Business Finance

 Worldpay Business Finance has a lot of benefits. Funding times are often quicker than traditional financing methods, and can be used for almost any legitimate business purpose. There may also be less risk to your personal assets because the advance is not secured against collateral like a family home or other personal property.

Here’s a rundown of the benefits:

  • One fixed funding fee, agreed upfront

No extra fees; no penalties

  • Advance made against sale of future card takings
  • Quick application time (~10 minutes)
  • Quick funding (as fast as 48 hours from completion of application)
  • Up to £300,000 advance for eligible customers
A port in stormy weather

Perhaps one of the biggest benefits of a business cash advance is flexibility. When sales are down, so is your payment, because you don’t make a monthly repayment like you do with run-of-the-mill business loans. You’ll never face a large invoice you can’t afford.

How does Worldpay Business Finance work?

When you take out a Worldpay Business Finance cash advance, the financing organisation (in this case Liberis) advances you £1,000 to £300,000. The amount is tailored to you, depending on your needs and your card takings history. You use the money in any way that fits your legitimate business purposes4.

It is a simple solution to business funding, advancing you funds by purchasing your future customer credit and debit card payments.

You pay the advance back from a portion of each future credit card or debit card transaction. You agree a percentage you’re comfortable with, with Liberis when you take out the advance. For example, you may choose 10% of debit and credit card takings, 15%, 20%, or something else.

Then, your payments provider, Worldpay, arranges for payments to be made automatically from the debit and credit card sales transactions it processes for you until you’ve paid back the advance, plus the funding fee.

Business cash advance example

Here’s an example of how a business cash advance works:

Let’s say you run a cupcake shop. You need a £10,000 cash advance for renovations on your building. You fill out a 10-minute application and could get the funding as soon as 48 hours from successful application. You complete your renovations and you’re back in business three days after that.

How you pay the money back

Let’s say you’ve chosen to pay back 20% of each card transaction. Twenty pence in every pound of cupcake sales goes toward paying back your cash advance and funding fee. As other customers roll in, the same percentage of the takings chips away at your balance.

If your card takings average £10,000 per month, you’ll pay back £2,000 every month. That means your total advance is paid back in about five months. You pay back the £10,000, plus a £2,000 funding fee for a total of £12,000. Here’s how it looks in a nutshell:

  • Get a £10,000 business cash advance.
  • Pay back 20% of every credit card and debit card transaction.
  • Pay a total of £12,000 (the £10,000 advanced, plus a £2,000 cost of finance).
  • If your takings are £10,000 per month, pay back your advance in around five months.
  • The payments happen in the background, as a percentage of each credit card transaction.

How much can be advanced?

A Worldpay Business Finance cash advance can be anywhere from £1,000 to up to £300,000 for eligible customers. That’s a nice chunk of flexibility, though of course the amount of your advance depends on your business performance

How quickly can funding be made available?

One of the best things about a business cash advance is the fast time-to-funding. The application process is quick, in most cases taking only 10 minutes. Approval happens fast too, with many businesses receiving funding in as little as 48 hours5.

How to apply for a business case advance

Applying for a business cash advance isn’t difficult. You simply need to complete a brief application. Liberis will do a check on your credit history—without affecting your credit score. In the application, you’ll need to demonstrate takings of at least £1,000 in the last four months.6

In summary

A business cash advance is an exciting approach to funding for small business owners. Businesses can now get access to working capital by selling a portion of future card sales. With no monthly payments and repayment from ordinary cash flow, a merchant cash advance is a financing source for real-world firms with real-world needs.

Find out more about how business cash advance can help your business.

1 This product is provided by Liberis Ltd. Terms and conditions apply. Worldpay Business Finance is not an FCA regulated product, it is provided by Liberis Ltd and Worldpay will receive a commission.

2 https://www.worldpay.com/uk/about/company-overview

3 https://www.liberis.com/our-history

4 Subject to status at the time of application. Amounts may be subject to change.

5 As of March 2019, 43% of customers are funded within 48 hours of the completion of their application

6 Eligibility is subject to change and is determined at the time of application. Applicants must provide evidence of a minimum of four months’ card takings, averaging at least £1000 per month and a minimum of ten transactions per month.