Merchant Cash Advance Rates 2026 — Updated October 2026
- Typical factor rate range for UK MCAs (October 2026)
- 1.10–1.50Typical factor rate range for UK MCAs (October 2026)
- APR equivalent: factor 1.10–1.50 repaid over 18 down to 6 months (see table)
- 13%–332%APR equivalent: factor 1.10–1.50 repaid over 18 down to 6 months (see table)
- Percentage of monthly card/sales revenue taken as repayment
- 10%–20%Percentage of monthly card/sales revenue taken as repayment
- MCA repayment is revenue-linked — no fixed monthly payment
- No fixed termMCA repayment is revenue-linked — no fixed monthly payment
Merchant cash advance (MCA) pricing uses a "factor rate" rather than an interest rate — making true cost comparison with other business finance difficult. A factor rate of 1.20 means you repay £1.20 for every £1 borrowed: £50,000 borrowed = £60,000 repaid. The factor rate does not change regardless of repayment speed, but the effective APR changes significantly based on how quickly you repay. The faster you repay, the higher the equivalent APR — because the same fixed cost is spread over a shorter period. Understanding this is essential for evaluating whether an MCA is competitive with alternatives.
Merchant Cash Advance Rates: Factor Rate to APR Equivalent — October 2026
Swipe the table sideways to see every column.
| Factor rate | Repaid over 6 months | Repaid over 9 months | Repaid over 12 months | Repaid over 18 months |
|---|---|---|---|---|
| 1.10 | 39% | 26% | 20% | 13% |
| 1.15 | 63% | 41% | 30% | 20% |
| 1.20 | 90% | 57% | 41% | 27% |
| 1.25 | 120% | 74% | 53% | 34% |
| 1.30 | 153% | 92% | 65% | 41% |
| 1.40 | 233% | 133% | 92% | 57% |
| 1.50 | 332% | 181% | 122% | 73% |
What determines your rate
How factor rates become true costs
A factor rate of 1.20 on a £50,000 MCA means total repayment of £60,000 regardless of when you repay. Repayment is typically 10%–20% of monthly card/sales revenue. If your business generates £25,000/month in card revenue and the MCA takes 15%, you repay £3,750/month. To repay £60,000 at £3,750/month takes 16 months. The effective APR at 16-month repayment on a 1.20 factor rate is approximately 30%. The same facility repaid in 8 months (double the revenue) would have an effective APR of approximately 65%. The MCA lender earns the same £10,000 regardless — the borrower absorbs the time-value difference.
When MCAs are justified despite the high effective APR
MCAs are justified when: (1) The business has no security for a traditional business loan; (2) The business needs capital within 24–48 hours (MCAs are fast); (3) The business's credit history excludes it from traditional business lending; (4) The business is seasonal and wants flexible repayment aligned to revenue (repayments slow automatically when sales slow). For a restaurant needing £30,000 for a kitchen refurb before the Christmas season, an MCA at 1.20 (£36,000 total repayment) is justified if the kitchen refurb generates £80,000 in additional Christmas revenue.
MCA vs business loan — the straightforward comparison
For any business that can access a standard secured business loan (property security or strong balance sheet), the loan is almost always cheaper than an MCA. A secured business loan at 9.5% APR on £50,000 for 12 months costs approximately £2,600 in interest. An MCA at 1.20 factor rate costs £10,000. The MCA costs £7,400 more for the same amount over the same period. Use an MCA only where business loan alternatives are genuinely not available. DBF always assesses whether a business loan is available before recommending an MCA.
Advance amount and factor rate relationship
MCA lenders typically advance 50%–200% of the business's average monthly card revenue. The advance amount relative to monthly revenue influences the factor rate — higher advances (relative to revenue) carry higher factor rates. A business generating £20,000/month in card revenue can typically access MCAs of £10,000–£40,000. The factor rate increases as the advance increases relative to monthly revenue: £10,000 advance might attract 1.12; £40,000 might attract 1.30. DBF assesses the most cost-effective MCA amount for the business's revenue profile.
How the APR equivalent is calculated
APR equivalent calculated as the internal rate of return on an advance repaid in equal monthly instalments of (advance × factor rate) ÷ months, compounded to an annual rate and rounded to the nearest 1%. Real MCA repayments are a share of daily or weekly card takings, so the actual term and APR equivalent move with your sales.
Worked cost example
- MCA option
- £45,000 at factor rate 1.22 = repay £54,900
- Repayment rate
- 15% of monthly card revenue = £4,200/month
- Estimated repayment term
- £54,900 / £4,200 = 13 months
- Equivalent APR
- ~42%
- Cost
- £9,900
Restaurant business. Monthly card revenue: £28,000. Needs: £45,000 for kitchen refurb.
No property security for business loan. Trading for 2 years. Clean credit.
Unsecured business loan (no property security available): £45,000 at 12.5% APR over 12 months.
Monthly: £4,009. Total interest: £3,105. Cost: £3,105. APR: 12.5%.
Monthly payment is fixed — no revenue-aligned flexibility.
Business loan costs £6,795 less than MCA.
Christmas revenue uplift from refurb: +£12,000/month over 3 months = £36,000. MCA payback justified by uplift.
DBF recommendation: business loan if available (fixed APR, lower cost). MCA only if business loan declined.
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Rate context and outlook
Bank Rate is 3.75% after the 17 September hold. Variable business facilities (revolving credit, invoice finance) move only with Bank Rate.
Fixed-rate hire purchase and leases are funded against swap rates, so some funders may nudge fixed pricing up after the September swap move. Quotes are typically held for 30 days.
Reviewed by David Doulton, Director, Doulton Bridging Finance — over 20 years in property finance. Last reviewed 1 October 2026. Doulton Money Ltd t/a Doulton Bridging Finance, FCA No. 814533.
Frequently asked questions
What is a merchant cash advance factor rate?
A factor rate is a multiplier applied to the advance amount to determine the total repayment. Factor rate 1.20 means you repay £1.20 for every £1 borrowed. On a £50,000 advance at 1.20, you repay £60,000 total. The factor rate is fixed — it does not change based on when you repay, unlike interest-bearing loans where early repayment reduces total interest.
What is the true APR of a merchant cash advance?
The effective APR depends on the factor rate and the repayment speed. A 1.20 factor rate repaid over 6 months has an effective APR of approximately 90%. Repaid over 12 months: approximately 41%. Repaid over 18 months: approximately 27%. Faster repayment = higher effective APR (same total cost, shorter period). This is why MCAs appear cheaper than they are when only the factor rate is shown.
When is a merchant cash advance the right choice?
MCAs are best when: no property security is available for a business loan, speed is critical (MCAs fund in 24–48 hours), the business has revenue-variable repayment needs, or traditional business lending is unavailable due to credit history or trading history. MCAs are not the right choice when a secured business loan or revolving credit facility is available — those are almost always cheaper.
How much can I borrow on a merchant cash advance?
Typically 50%–200% of average monthly card/sales revenue. A business generating £25,000/month in card revenue can typically access £12,500–£50,000. The factor rate increases as the advance amount increases relative to monthly revenue. DBF assesses the most cost-effective advance amount for your revenue profile.
How quickly can I get a merchant cash advance?
MCAs are among the fastest business finance products — many cases fund within 24–48 hours of application. The assessment is based on card terminal data (which the lender can access directly) and a brief application process. There is no RICS valuation, no solicitors, and no lengthy underwriting. Speed is the primary reason MCAs are used despite their higher cost.
Can a new business get finance?
Yes, though many funders want 1–2 years of trading or a larger deposit; directors' personal credit matters more for young businesses.
Is VAT charged on hire purchase?
On HP, VAT is paid upfront with the deposit and can usually be reclaimed; on leases it is added to each rental.
What is a balloon payment?
A larger final payment that lowers the monthly cost; you pay it, refinance it or return the asset, depending on the product.
Do I need to put down a deposit?
Usually 0%–20%, depending on the asset, its age and your trading history.
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Independent whole-of-market advice · FCA No. 814533