Can hotels get a merchant cash advance based on their card takings?

Short answer: Yes — many UK hotels can access a merchant cash advance (MCA) that’s repaid from card takings. MCAs are designed for businesses with regular card payments and can be arranged quickly, but they often cost more than traditional loans and can strain cash flow if takings fall. If you’re considering this for amounts typically above £10,000, start with a free eligibility check to compare offers and understand pricing.

Get Quote Now — Free Eligibility Check

Note: UK Business Loans is an introducer — we do not lend. Our service is free and no-obligation; submitting an enquiry helps us match your hotel with suitable lenders or brokers. Your enquiry does not affect your credit score.

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What is a merchant cash advance (MCA)?

A merchant cash advance is a form of commercial financing where a provider gives a hotel a lump-sum up-front payment in return for a percentage of the business’s future card takings (debit/credit card sales). Rather than a fixed-interest loan repaid over months or years, an MCA is repaid as a share of daily or weekly card receipts (or via fixed daily debits), meaning repayments rise and fall with your card revenue.

Key points in plain English:

• Advance today in return for a fixed multiple (factor rate) of the amount advanced (for example, advance £20,000 repaid as £24,000 over time).
• Repayments are taken from card receipts — usually daily or weekly — either via your payment processor or by the provider debiting your bank.
• MCAs are priced differently to loans: providers use a factor rate rather than conventional APR; this makes direct cost comparisons with loans harder, so calculate an equivalent cost before you sign.

How MCAs are structured for hotels

Advance size / funding

Providers size advances based on historic card volumes. Typical advance sizes vary widely but commonly sit between 25% and 150% of one month’s average card takings, depending on risk and provider appetite. For hotels with significant card turnover, larger advances may be available.

Repayment method and timing

Common repayment models:

• Split of card takings: provider takes a fixed share (e.g., 10–25%) of card sales until the agreed amount is repaid.
• Fixed daily/weekly debits: set daily amounts are debited regardless of takings, which can create pressure in quieter periods.
• Blended approaches where a minimum payment is taken plus a percentage of excess card receipts.

Repayments are typically automated and can begin shortly after funding. This gives speed but reduces the flexibility of cash retained for operations.

Holdback, factor rate and fees

MCAs use a factor rate (e.g., 1.15–1.6) to determine the total repayable, not an APR. That means a £50,000 advance repaid at a factor rate of 1.3 would require £65,000 in total repayments. Factor rates and effective APRs vary by provider and risk — always ask for an example schedule with equivalent APR calculations and total cost figures (illustrative only).

Term / duration

There’s no fixed “term” in months: repayment duration depends on your card takings and the agreed remittance percentage. Seasonality matters — slower months extend duration and can increase cost in some structures (if minimum daily payments apply).

Are hotels good candidates for MCAs?

Many hotels are well-suited to MCAs because they typically have steady card volumes from guest payments, bookings and F&B sales. MCAs can be a fast source of working capital for refurbishments, urgent repairs, seasonal staffing or short-term cashflow gaps.

Hotel advantages:

• High proportion of takings on card payments — attractive to MCA providers.
• Recurring bookings, group business and card deposits give predictable volume.
• Quick access — many providers fund in days once documents are verified.

Hotel-specific risks:

• Seasonality — if peak months drive your cashflow, daily remittances in quieter months can cause strain.
• Chargebacks/cancellations — high cancellation rates can reduce net card takings and lengthen repayment.
• Margins — MCAs are often costlier than bank debt; acceptance depends on your margin and whether short-term cash is worth the premium.

Hypothetical example (illustrative): A 40-room boutique hotel reports average monthly card takings of £80,000. A provider offers a £40,000 advance (≈50% of a month) at a factor rate of 1.35. Total repayable = £54,000. If the provider takes 15% of card takings daily, the advance would be repaid in roughly 8–9 months at current volumes — slower months lengthen the term. These figures are hypothetical; actual offers vary.

Typical eligibility criteria for hotels

Common requirements from MCA providers:

• Minimum monthly card takings — many providers prefer businesses with at least £5k–£25k+ per month in card sales (thresholds vary).
• Trading history — providers often want several months to a year of trading history; established hotels with seasonal data are easier to assess.
• Merchant services statements (card processing history), recent bank statements and ID for directors.
• Assessment of chargeback/cancellation history and sector risk (events, tourism exposure).

Note: Providers will price based on perceived risk — businesses with higher cancellations or payment disputes may face higher factor rates or lower advances.

Pros and cons — is an MCA right for your hotel?

Advantages

• Speed — quick approval and fast funding compared with many bank products.
• No fixed asset security required in many cases — useful if you don’t want to mortgage property.
• Repayments flex with takings (if percentage-based) — you pay less on quieter days.

Disadvantages

• Higher effective cost than most traditional business loans.
• Daily/weekly remittances can tighten your operating cashflow, especially off-season.
• Harder to compare costs — factor rates require conversion to APR for fair comparison.

Decision checklist — consider an MCA if:

• You need funds fast and can absorb higher cost for speed.
• Your card volumes are consistent and sufficient to support daily remittances.
• The funding is for revenue-generating or urgent operational needs (not long-term refinancing).

Avoid MCAs if you expect prolonged drops in card revenue or if cheaper secured/unsecured loans are available and viable.

Alternatives to merchant cash advances for hotels

Compare MCAs against these options:

• Short-term business loans / overdrafts: Usually cheaper, fixed terms, predictable repayments — best if you have a good credit history and time to apply.
• Invoice finance: Useful if you invoice corporate clients or groups rather than rely solely on card takings.
• Asset finance: Pensionable for furniture, kitchen equipment or beds — preserves cash and spreads cost.
• Commercial mortgage / secured loan: For property purchase or major refurbishment at a lower cost but requires security and longer approvals.
• Bridging / short-term secured finance: For immediate property-related cash needs, but secured and typically short-term.

When to prefer an alternative: if you can wait a few weeks and qualify for a bank loan or asset finance, the lower cost may justify waiting. If you need a rapid injection and card takings are strong, an MCA can make sense.

How UK Business Loans can help hotels

We connect hotel operators with appropriate lenders and brokers quickly. Complete a short, free enquiry and we’ll match you with partners who are likely to consider MCAs based on your card-processing history, or suggest better-suited alternatives.

Get Started — Free Eligibility Check

No obligation. No fee. We only share your details with selected lenders or brokers who can help with your request. We typically match businesses requiring £10,000 and above.

For more sector-specific options and case examples, see our hotels sector overview: hotels business loans.

Practical next steps for hotel owners (quick checklist)

1. Prepare documentation: 6–12 months of merchant statements, 3 months bank statements, director ID and brief business summary.
2. Estimate realistic monthly card takings (show seasonal highs and lows).
3. Decide funding range required — enter a range (e.g., £10k–£50k) rather than a single figure.
4. Ask each provider for a worked example showing total repayable and an equivalent APR.
5. Check for minimum daily/weekly debit requirements and how they’ll affect off-peak months.

Frequently asked questions

Will an MCA affect my credit score?

Submitting an enquiry through UK Business Loans does not affect your credit score. Individual lenders or brokers may run checks later if you apply directly.

Can a start-up hotel get an MCA?

Start-ups without a card-processing track record find it harder. Providers usually want evidence of regular card takings — established businesses are more likely to qualify.

Do MCAs require personal guarantees?

Some providers may ask for director guarantees or other security depending on risk; others price without personal guarantees but at higher factor rates.

How fast can I receive funds?

Many MCA providers can fund within 24–72 hours of receiving required paperwork and completing onboarding.

What happens if card takings drop?

If takings fall, percentage-based repayments reduce accordingly, but fixed daily debits still come out — that can cause cashflow stress. Always model worst-case seasonal scenarios before agreeing.

Are MCAs regulated by the FCA?

MCAs arranged for businesses are generally treated as commercial finance. UK Business Loans is an introducer and not a lender; we help you connect with lenders and brokers who can explain regulatory status for their products.

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Final summary and call to action

Yes — many hotels can obtain merchant cash advances based on card takings, and MCAs can be a fast, flexible way to access working capital. However, they can be comparatively expensive and may place pressure on cashflow during quieter months. Before proceeding, gather merchant statements, compare factor rates, ask for clear cost examples converted to equivalent APRs, and consider lower-cost alternatives where possible.

Ready to compare options? Get matched with lenders and brokers who specialise in hospitality finance — complete a short enquiry now.

Free Eligibility Check — Get Quote Now

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Author: Commercial Finance Specialist, UK Business Loans — Published: 29 October 2025

Author bio: Commercial Finance Specialist at UK Business Loans. Over a decade of experience matching UK hospitality businesses with appropriate finance partners. We connect hotels to lenders and brokers for funding from £10,000 upwards. Our introducer service is free and no-obligation.

1. Can hotels get a merchant cash advance (MCA) based on card takings?
Yes — many UK hotels can access an MCA that’s repaid from card takings, making it a fast option for working capital.

2. How quickly can hotels receive MCA funds?
Once approved and paperwork is complete, many MCA providers can fund within 24–72 hours, depending on merchant-provider integration.

3. How much can a hotel borrow with an MCA?
Advance sizes vary by provider and historic card volumes but commonly range from around 25% to 150% of one month’s average card takings, with UK Business Loans typically matching businesses seeking £10,000+.

4. How are merchant cash advances repaid from card takings?
MCAs are usually repaid as a fixed percentage of daily or weekly card sales or via fixed daily/weekly debits, sometimes with a blended minimum plus percentage structure.

5. How do I compare the cost of an MCA to a traditional loan?
Ask providers for the factor rate, total repayable and an equivalent APR example so you can convert the factor rate into a comparable annual cost before signing.

6. Will submitting an enquiry through UK Business Loans affect my credit score?
No — completing a free eligibility enquiry with UK Business Loans does not affect your credit score; lenders may run checks only if you proceed with an application.

7. What documents do MCA providers typically request from hotels?
Providers commonly ask for 6–12 months of merchant/processing statements, recent bank statements, director ID and a short business summary showing seasonality and cancellations.

8. Are MCAs suitable for seasonal or start‑up hotels?
Seasonal hotels can qualify but providers will price and size advances around seasonal patterns and start‑ups without card history generally find it harder to qualify.

9. Will an MCA require personal guarantees or security?
Some MCA providers may request director guarantees or other security for higher‑risk hotels, while others will offer unsecured advances at higher factor rates.

10. What are cheaper alternatives to an MCA for hotels?
If you can wait and qualify, short‑term business loans, overdrafts, asset finance, invoice finance or secured commercial loans are typically lower‑cost alternatives.