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 are indicative, change without notice and depend on the lender, product, asset, term and your credit profile at the time of application. They are not an offer of finance. Comparison rates, where shown, are true only for the example given.
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 fixed at the start, so the total cost is known before you accept.
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.
Questions from retail
How do retailers fund stock ahead of the peak season?
Trade finance pays suppliers for stock with 90 to 180 days to repay from sales, a line of credit funds deposits and top-ups, and a merchant cash advance repays from daily card takings. The right mix depends on your margins and how quickly stock turns, and a broker prices all three against your season.
What is a merchant cash advance and does it suit retail?
A merchant cash advance is a lump sum repaid as a fixed percentage of daily card takings, so repayments flex with trade and are lighter in quiet weeks. It suits retailers with strong card sales who need funds fast and can be more expensive than a term loan, so it is best for short, high-return uses such as stock for a peak season.
Can a store fit-out and POS be financed together?
Yes. Shopfitting, joinery, lighting, signage, refrigeration and POS systems can be funded under one fit-out facility with the builder and suppliers paid as the work progresses, repaid over three to five years within the lease term. Movable equipment is often financed separately at a sharper rate and combined under the same application.
What do lenders look for in a retail business?
Consistent daily takings in the bank statements, gross margin, stock turn, the lease term and the seasonality of the business. Lenders like retailers with strong card sales and a stable location. For new stores, a deposit, retail experience and a business plan matter; established stores are often approved on bank statements alone.