Merchant cash advance · Retail
Merchant cash advance for retail
Retail finance is lending sized to daily takings and seasonal stock cycles, covering inventory buys ahead of peak trade, store fit-outs and the working capital that carries a shop through quiet months.
How a merchant cash advance works for retail
A merchant cash advance takes a fixed percentage of daily card settlements until an agreed total is repaid, so repayments shrink automatically when trade is quiet. For a retailer that is genuinely useful in February. What it is not is cheap: these are priced as a factor rate, not an interest rate, and a 1.2 factor over six months is far more expensive than the number suggests. We will show you the annualised equivalent next to a term loan and let you decide with the real figures in front of you.
The cash-flow pattern we plan around
Daily card takings with heavy seasonal peaks, against stock commitments and supplier deposits made two to four months ahead of the selling season.
What retail typically fund
- Seasonal stock and supplier deposits
- Store fit-out and refurbishment
- POS, security and back-of-house systems
- Rent and wages through quiet months
- Opening a second location
Merchant cash advance for retail: the numbers
| Typical amounts | $5,000 – $300,000 |
|---|---|
| Term | 3–18 months |
| Indicative rates | 25% – 60% p.a. |
| Repayments | A set percentage of daily card settlements |
| Speed | 24–48 hours |
| Documents retail usually need | ABN and lease or licence for the premises · 6 months of bank statements and merchant statements · Supplier quotes or purchase orders for stock |
Rates shown are indicative ranges observed across our lender panel for the period stated. They are not an offer or quote. Your rate depends on your business, the lender, the amount, the term and the security offered. The lender makes the final credit decision.
Key terms
Retail inventory finance
Retail inventory finance is short-term funding used to buy stock ahead of a selling season, repaid from the sales that stock generates rather than from existing cash reserves.
Merchant statement assessment
Merchant statement assessment is a lending approach that sizes a facility against daily card settlement data, allowing a retailer to be assessed on current trade rather than on a year-old set of financials.
What is a merchant cash advance?
A merchant cash advance is a lump-sum payment to a business in exchange for an agreed share of its future card sales. Repayment happens automatically as a percentage of each day’s takings until a fixed total, set by a factor rate, has been repaid.
What is a factor rate?
A factor rate is a multiplier applied to the amount advanced to determine the total repayable — a 1.25 factor on $50,000 means repaying $62,500. It is not an interest rate, and because the balance reduces over the term, the equivalent annual percentage rate is substantially higher.
Is a merchant cash advance regulated credit?
Merchant cash advances provided for business purposes are not consumer credit under the National Credit Code. Many providers are signatories to the Australian Finance Industry Association’s Online Small Business Lenders Code, which requires disclosure of an annualised cost figure.