Compare finance types
Merchant cash advance vs Trade finance: which is right for your business?
The main difference between a merchant cash advance and a trade finance is how they are secured and repaid: a merchant cash advance suits cafés, restaurants, salons, bars and retailers with steady card sales that need funds fast for stock, a fit-out, equipment or a busy season, while a trade finance suits importers, wholesalers and distributors with proven sales and reliable suppliers.
Merchant cash advance vs Trade finance at a glance
| Merchant cash advance | Trade finance | |
|---|---|---|
| What it is | A merchant cash advance is a lump sum advanced against your future card sales, repaid automatically as a small share of each day’s card takings until an agreed total is repaid. Approval is fast, no property security is needed, and repayments rise and fall with your trade. | Trade finance is a revolving facility that pays your suppliers for goods at the time of order and gives your business 60–180 days to repay, bridging the gap between paying for stock and being paid for it. It covers both imported and domestic purchases. |
| Amount | $5,000 – $300,000 | $50,000 – $5,000,000 |
| Term | 3–18 months | 2–6 months |
| Indicative rate | 25% – 60% p.a. | 9% – 20% p.a. |
| Rate type | Factor rate | Variable |
| Security | Unsecured (guarantee may apply) | Secured by receivables |
| Repayments | A set percentage of daily card settlements | Each drawdown repaid in full at the end of its term |
| Typical speed | 24–48 hours | 1–3 weeks to establish, then 24–48 hours per drawdown |
| Best for | Cafés, restaurants, salons, bars and retailers with steady card sales that need funds fast for stock, a fit-out, equipment or a busy season | Importers, wholesalers and distributors with proven sales and reliable suppliers |
| Consider the other if | Businesses paid mostly by invoice or bank transfer, where invoice finance or a line of credit usually fits better | Service businesses with no stock, or one-off purchases that do not justify a facility |
| Tax | The cost of a business-purpose advance is generally deductible. Confirm the treatment with your accountant. | Interest and facility fees on trade borrowing are generally deductible. Confirm with your accountant. |
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.
When to choose a merchant cash advance
A merchant cash advance is usually the better fit for cafés, restaurants, salons, bars and retailers with steady card sales that need funds fast for stock, a fit-out, equipment or a busy season. Its main advantages are repayments fall automatically in quiet trading periods, funding in 24–48 hours with minimal documentation, no property security required. Consider the alternative if businesses paid mostly by invoice or bank transfer, where invoice finance or a line of credit usually fits better.
When to choose a trade finance
A trade finance is usually the better fit for importers, wholesalers and distributors with proven sales and reliable suppliers. Its main advantages are pay suppliers upfront and often negotiate better pricing, revolving limit recycles with each repayment, works alongside invoice finance to cover the full cycle. Consider the alternative if service businesses with no stock, or one-off purchases that do not justify a facility.
Merchant cash advance
A merchant cash advance is a lump sum advanced against your future card sales, repaid automatically as a small share of each day’s card takings until an agreed total is repaid. Approval is fast, no property security is needed, and repayments rise and fall with your trade.
Trade finance
Trade finance is a revolving facility that pays your suppliers for goods at the time of order and gives your business 60–180 days to repay, bridging the gap between paying for stock and being paid for it. It covers both imported and domestic purchases.