Merchant Cash Advances: A Smart Tool for Growth – Especially with the £100 Contactless Upgrade

Getting a Merchant Cash Advance (MCA) can be a lifeline for many UK businesses, particularly now, as contactless transaction limits rise. Let’s explore how an MCA works, why the £100 contactless payment limit matters, and how Principal Business Finance Ltd can support your business growth with MCA solutions.

What Is a Merchant Cash Advance (MCA)?

A Merchant Cash Advance isn’t exactly a loan – it’s a lump sum provided upfront in exchange for a portion of your future credit/debit card sales. The advance is repaid as a fixed percentage of your daily card transactions until the total (plus fees) is fully paid back.

Key features:

• Fast access to funds- often within a couple of days.

• Flexible repayments- higher sales days mean higher payments, slower days mean less pressure.

• Credit score not critical- lenders focus on sales performance instead.

Why the £100 Contactless Limit Boosts the Appeal of MCAs

The UK has increased its contactless limit to £100 per transaction, making tap-to-pay even more widespread across sectors like retail, hospitality, and convenience.

For businesses using MCAs:

• Higher daily card sales mean quicker MCA repayments, reducing the lifespan and cost of the advance.

• Improved liquidity comes from faster sales, supporting better cash flow and business agility.

Benefits of an MCA with Higher Contactless Usage

1. Speedy access to capital – Ideal for covering inventory, staffing, or marketing during growth phases.

2. Auto-adjusting repayments – Payments align with what you’re actually earning, making this option more flexible than traditional loans.

3. Accessible even with imperfect credit – Eligibility is often based on sales data, not credit scores.

Important Considerations Before Opting for an MCA

MCAs can be convenient but they come with trade-offs.

• High cost: With factor rates between 1.1 and 1.5, a £50,000 advance could cost up to £75,000, far exceeding typical loan interest rates.

• Daily repayment pressures: While flexible, this can strain cash flow during slow sales periods.

• Risk of debt stacking: Taking multiple MCAs to cover previous ones can spiral into unmanageable debt.

How Principal Business Finance Ltd Can Help

We specialise in helping UK businesses assess whether an MCA is right for them—and structuring smarter solutions:

• Compare pricing and terms across multiple MCA providers.

• Assess affordability based on your seasonal sales cycle and cash flow.

• Explore alternatives like commercial loans, invoice finance or asset funding if MCAs are too costly.

• Support refinancing later to switch into lower-cost, long-term finance as results improve.

Industries Where MCAs Shine – Especially With Enabled Contactless Payments

Since MCAs rely on card volumes, sectors that increasingly use contactless payments are ideal candidates:

• Retail & Hospitality: Higher purchase values through tap-to-pay speeds up MCA payback.

• Quick-Service Restaurants: Fast turnover and more high-volume sales reduce costs of funding.

• Events & Entertainment: Contactless payments maximise takings-driving affordability in MCAs.

Final Thoughts

Merchant Cash Advances offer fast access to cash, with flexible repayment terms tied to your sales for businesses with strong card transactions, now amplified by the £100 contactless limit, MCAs can be a powerful tool.Just remember: Cost and terms matter. Work with experts like Principal Business Finance Ltd to assess competitive funding structure for your growth.

Curious how an MCA could work for your business? Contact us for a tailored review. Contact us on 01604217998, email info@principalbusinessfinance.co.uk, or enquire here.