A merchant cash advance (MCA) gives a business a lump sum in exchange for a fixed percentage of future card-terminal takings until the advance and a factor fee are repaid. Credicorp Flex is a revolving credit facility with a defined limit, drawn and repaid at the company's direction. Both can suit businesses with variable revenue, but the repayment mechanic is fundamentally different.
How a merchant cash advance repays
An MCA provider integrates with your card-payment processor. Each day a set percentage of your card sales is swept automatically to the provider. In quiet periods you repay less; in busy periods you repay more — the total repayable is fixed regardless of how long it takes. This aligns repayment with revenue but also means the provider has visibility of your terminal data and a prior claim on card receipts.
How Credicorp Flex repays
Flex has no link to your card terminal or revenue stream. You draw funds when needed, repay on the schedule agreed in your facility terms, and retain full control of your cash flow. There is no daily sweep and no third party integrated with your payment processing. For businesses that want to keep their banking and lending relationships separate, this is a meaningful distinction.
Comparing total cost
MCAs are often quoted as a factor rate (e.g. 1.2 times the advance) rather than an interest rate, which can make cost comparison difficult. Before choosing, convert any MCA quote to an effective annualised cost and compare it directly with the cost disclosure for Flex or a term loan. The results can be surprising — MCA factor rates that look modest can translate to high effective annual costs if repayment is stretched.
We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.
See also: Revolving credit facility vs term loan, Credicorp Flex vs a bank overdraft