Merchant cash advance repayment structures for retailers — % of card sales explained

Summary: If you run a retail shop and are considering a merchant cash advance (MCA), most MCA repayments are taken as a percentage of your card sales (a “remittance” or “holdback”) with typical ranges of about 10%–35% of card takings. The exact structure depends on advance size, card turnover, factor rate and seasonality. This guide explains the common repayment mechanisms, how costs are measured (factor rate vs APR), worked retailer examples, pros/cons, questions to ask providers and how UK Business Loans can help you compare offers via a quick, no‑obligation eligibility check.

Get Quote Now — Free Eligibility Check

Disclaimer: We are an introducer — not a lender or regulated financial adviser. This page is for information only and does not constitute financial advice. Always check full terms with any lender or broker before agreeing.

Introduction

If you run a retail shop and are considering a merchant cash advance (MCA), you’re probably asking: what repayment structures are typical for MCAs — specifically as a percentage of card sales? Retailers choose MCAs because repayments flex with takings: higher sales mean larger payments, quieter periods mean smaller ones. This page covers typical remittance percentages, how repayments are collected, the relationship with factor rate (total cost), worked retailer examples and practical questions you should ask before signing.

Quick overview: What is a merchant cash advance?

A merchant cash advance is not a traditional loan. For retailers it typically means a lump sum advance in return for a fixed multiple of the advance (the factor rate), repaid by taking a portion of the business’s card and electronic payments until the total agreed amount is repaid.

• Common uses for retailers: buy seasonal stock, cover a short-term cash flow gap, refurbish a shop, or upgrade tills/EPOS.
• Repayment is commonly via a percentage of card sales (daily or weekly sweep) rather than a fixed monthly instalment.
• MCAs are typically arranged for advances from around £10,000 upwards through brokers and specialist funders.

How MCA repayments work in practice

Here’s how most MCA repayments operate in everyday shop life:

• Remittance % / holdback: The funder collects a defined share of your card takings (e.g. 15%) each day or week. That money goes towards the total repayable amount (advance × factor rate).
• Daily sweep vs manual remittance: Some providers integrate with your merchant services to take the percentage automatically (a “daily sweep”); others require you to remit funds via a portal or bank transfer.
• Factor rate: The advance is multiplied by a factor (for example, 1.2 to 1.6) to calculate the total repayable. That total is then collected via the remittance % until cleared.
• Effect on cash flow: On busy days the payment amount is higher; on quiet days it reduces. This variable nature helps in slow periods but can reduce margin during peaks.

Here’s what that looks like in real terms: if your shop takes £1,000/day in card sales and your remittance is 20%, £200/day is applied to repay the MCA.

Typical percentage ranges & common repayment structures

Common repayment structures for MCAs used by retailers include fixed percentage remittances, variable percentages with caps, flat daily/weekly amounts and hybrids. Typical ranges vary by lender and retailer profile.

Structure	Typical percentage / range	When used
Fixed percentage of card sales (daily/weekly)	10% – 35%	Most common; works where card volumes are stable
Variable percentage with caps / floors	5% – 40% (with weekly minimums or caps)	Seasonal businesses needing protections for quiet/busy periods
Flat daily/weekly collection (fixed amount)	Equivalent to set % based on expected takings	When card volumes are predictable
Hybrid: percentage + minimum	Percentage plus a guaranteed daily/weekly minimum	Protects funder and retailer during slow weeks

What affects where you sit in these ranges? Advance size, expected repayment term, recent card turnover, historic margins, seasonality and the provider’s risk appetite all shape the remittance % they offer.

Factor rate vs percentage — why both matter

MCAs commonly use a factor rate (e.g. 1.2–1.6) to state cost. Unlike an APR, a factor rate multiplies the advance to give a total repayable figure.

Why the difference matters:

• The remittance % determines speed of repayment (how quickly the total repayable is cleared).
• The factor rate determines how much you ultimately repay (total cost).
• Two offers with the same remittance % can have different factor rates — and therefore very different total costs.

Short example: a £10,000 advance with factor 1.3 gives total repayable £13,000. If you remit 20% of daily card sales averaging £1,000, that’s £200/day — expected days to repay ≈ 65 days, though real timing varies with takings. Ask funders for total repayable and example payback timelines at your current sales level to compare effectively.

Worked examples for retailers

Below are simple illustrations to make the mechanics clear. These are illustrative — always model with your own numbers.

Example A — Busy corner shop

• Advance: £10,000
• Average daily card takings: £1,000
• Remittance: 20% of card sales → ~£200/day
• Factor rate quoted: 1.3 → total repayable £13,000
• Estimated repayment days: £13,000 ÷ £200 ≈ 65 days (variable with sales)

Example B — Seasonal boutique

• Advance: £20,000
• Average daily card takings: seasonal (peak £1,500/day; off‑season £300/day)
• Remittance: 15% of card sales with a weekly minimum cap
• Factor rate: 1.4 → total repayable £28,000
• Practical effect: peak months accelerate repayment; off‑season stretches term and raises effective cost — negotiate seasonality protections or minimums

Practical tips: model worst‑case daily takings, ask for example repayment timelines at your current turnover, and check if the provider offers caps, payment holidays or seasonal adjustments.

Get Started Free Eligibility Check — quick, free and non‑binding; we’ll match you to lenders/brokers who specialise in retail finance (advances £10k+).

Pros and cons for retailers

Red flags & questions to ask lenders

Before agreeing, always get clear written answers on:

• Exact remittance % and whether it is fixed or variable.
• Factor rate and the total repayable amount (show examples using your current takings).
• Collection method — automated merchant account sweep, gateway integration, or manual remittance?
• Are there caps, minimums, payment holidays or seasonal protections?
• Early settlement terms — is there a discount or penalty?
• Operational implications — will the provider integrate with your card processor or require a separate account?

Ask for sample repayment scenarios at your actual daily/weekly sales levels and request clear contract terms before signing.

How UK Business Loans helps retailers

UK Business Loans connects retail businesses seeking finance (advances from around £10,000) with lenders and brokers who specialise in merchant cash advances and other retail funding solutions. Complete a short enquiry — it’s not an application; it’s information we use to match you with the right partners.

Get Quote Now — Free Eligibility Check — most businesses hear back within hours; no obligation to proceed.

If you’d like sector-specific options for shops, see our retailers shop business loans page for other finance types and guidance: retailers shop business loans.

FAQ

What percentage of card sales will a lender typically take?

Typical remittance percentages range from about 10% to 35% for many retailers. The exact rate depends on card turnover, advance size, term expectations and provider appetite.

Is an MCA deducted automatically from my card processor?

Many providers collect via an automated daily or weekly sweep from your merchant account; others use separate collection arrangements. Confirm the collection method and any processor implications in writing.

Can I negotiate the percentage?

Yes—bigger, predictable card volumes and a stronger business profile generally improve negotiating power. A broker can often help secure more favourable remittance % or factor rates.

How does MCA cost compare to a normal business loan?

MCAs are generally more expensive than conventional business loans but provide speed and repayment flexibility. Compare total repayable (factor rate) and sample timelines to decide.

Will applying affect my credit score?

Submitting an enquiry via UK Business Loans does not affect your credit file. Lenders or brokers may perform checks later if you proceed with an application.

Final summary & call to action

Most merchant cash advances for retailers use a percentage of card sales as the repayment method — commonly 10%–35% depending on your business and the deal. The remittance % controls repayment speed; the factor rate determines total cost. Model repayments against your actual card turnover, ask key operational and cost questions, and compare offers on total repayable examples.

Start Your Free Eligibility Check — Get a Quick Quote — complete our short form (under 2 minutes); we’ll match you to lenders and brokers who understand retail MCAs.

---

Written by: UK Business Loans content team • Date published: 2025-10-31 • Last reviewed: 2025-10-31

Further reading: FCA guidance on financial promotions (https://www.fca.org.uk/), and general merchant service advice from major card processors. Always request full terms and clear repayment examples from any lender or broker before committing.

1. What is a merchant cash advance (MCA) and how does repayment as a percentage of card sales work?
An MCA is a lump-sum advance repaid by taking a fixed percentage of your daily or weekly card/electronic takings until the total repayable (advance × factor rate) is cleared.

2. What percentage of card sales will a lender typically take?
Typical remittance percentages for retailers range from about 10% to 35% of card takings, depending on card turnover, advance size, seasonality and the provider’s risk appetite.

3. How does a factor rate differ from APR and why does it matter?
A factor rate multiplies the advance to give the total repayable (e.g., 1.3 = repay 130%), whereas APR annualises cost, so compare factor rate and remittance % together to understand true cost and repayment speed.

4. Will submitting an enquiry via UK Business Loans affect my credit score?
No — completing an enquiry with UK Business Loans is not a credit application and won’t affect your credit file, although lenders may perform checks later if you proceed.

5. Are MCAs cheaper than conventional business loans?
Generally no — MCAs are typically more expensive than conventional business loans but are chosen for speed, flexibility and repayments that scale with sales.

6. Can I negotiate the remittance percentage or factor rate?
Yes — businesses with larger or more predictable card volumes, a stronger profile, or working through a broker often have better negotiating power to secure lower remittance % or factor rates.

7. How are MCA repayments collected and will that affect my merchant account?
Repayments can be collected via automated daily/weekly sweeps from your merchant account, gateway integration, or manual remittance, so always confirm the collection method and any processor implications in writing.

8. What key questions should I ask a lender before agreeing an MCA?
Ask for the exact remittance %, factor rate and total repayable, sample repayment timelines based on your actual takings, collection method, caps/minimums, early settlement terms and any operational impacts.

9. Who can use UK Business Loans to find MCAs and how fast will I get matched?
UK Business Loans helps sole traders, limited companies and SMEs (typically seeking advances from around £10k) by matching them to FCA-regulated brokers and lenders, with most responses arriving within hours.

10. How do I compare MCA offers to choose the best deal for my shop?
Compare total repayable (factor rate), the remittance % applied to your current card turnover, projected repayment timelines, collection method, contract terms and any seasonal protections to assess true cost and impact.