Why we do not publish a best buy table
Most pages ranking for this phrase present a numbered list of providers. We do not, for a simple reason: the pricing that would justify a ranking is not published and is not fixed. Factor rates, holdback percentages and advance sizes are quoted per business, against that business's card takings, sector and trading history. A funder that is expensive for a small salon can be competitive for a restaurant group, and the same funder's appetite changes as its own funding costs change.
Any table claiming otherwise is either reporting an indicative range that applies to almost nobody, or ordering providers by commercial relationship. Neither helps you decide. What does help is knowing what to ask for, what to compare, and what a well-structured offer looks like next to a poor one, because those things are stable even when pricing is not.
So this guide is a method rather than a league table. It assumes you have two or three offers in front of you, or are about to gather them, and it sets out how to read them. Where a comparison of individual funders is genuinely useful, it belongs on a site that reviews them properly; our sister site publishes independent reviews of the main UK funding programmes, and we point readers there rather than duplicating the work.
One thing to settle before any of it applies. Nearly everything sold as a merchant loan is a merchant cash advance, which is a purchase of your future card sales rather than credit. If that distinction is new, read what is a merchant loan first, because several of the criteria below only make sense once you know why there is no APR to compare.
First decide whether you want an advance at all
The single largest cost saving available in this market is not choosing a better advance. It is establishing that you do not need one. Before comparing funders, test the alternatives honestly against the job the money is doing.
- An unsecured business loan. Cheaper in total for a business whose revenue is predictable enough to meet a fixed instalment in its worst month, and it builds a repayment record that helps the next facility. Banks, challenger banks and online business lenders all write them, and several now decide in days.
- An overdraft or business credit card. For small, short and recurring gaps, the arrangement cost of a formal facility is often not worth paying.
- Invoice finance. If a meaningful share of your revenue is invoiced rather than taken at a till, invoice finance advances against those invoices and is usually cheaper than an advance on the card side.
- Asset finance. Where the money is buying equipment, funding the asset directly is normally cheaper than funding it from general working capital.
An advance earns its place in two situations. The first is a business whose takings swing enough that a fixed instalment is genuinely risky, where the flexibility is worth the premium. The second is a business that cannot obtain a term facility at all, because it is young, because of bad credit history, or because its accounts do not yet show what its trade shows. In both cases the advance is doing something no cheaper product will do.
What it should not be used for is long-term or structural funding, refinancing existing debt, or covering trading losses. The cost is fixed at the outset and does not reward a long payback, and a holdback on every card sale tightens the cash flow of a struggling business rather than relieving it. If the honest description of your position is that the business is losing money, an advance postpones the problem at a price.
Criterion one: the total in pounds
Every comparison starts here, and most go wrong here. A factor rate is not a rate of interest and cannot be compared with one. It fixes the total you will deliver and says nothing about how long delivery takes, which is precisely what an interest rate prices.
So convert every offer to the same figure: the total amount deliverable in pounds, including all fees. An advance of £40,000 at a factor rate of 1.25 delivers £50,000, so the cost of the money is £10,000. If a second funder offers £40,000 at 1.22 but adds a £900 arrangement fee, the total is £49,700, and the apparently better rate is worth £300 rather than the £1,200 the multiplier suggests.
Then add the missing dimension. Take the holdback percentage and your realistic average monthly card takings, and work out how many months delivery will take. Use your worst recent quarter rather than your best, because optimism about volume is the most common error in the whole exercise. That gives you a period, and the period converts a total into an annualised equivalent you can hold against a loan rate.
The result frequently surprises people, and it should. A short delivery period on a high factor rate produces a high effective annual cost even though the paperwork looks modest. That does not automatically make the offer wrong, since you may be buying flexibility that a cheaper product will not give you, but it should be a decision rather than a discovery. Model it before you sign, not afterwards.
One more discipline. Ask each funder for the total in writing. A funder who will quote a factor rate but resists putting a pounds figure on the total is telling you something about how the rest of the relationship will run.
Criterion two: how the money is collected
Two offers with identical totals can feel completely different to run a business through, because the collection mechanism decides how your cash flow actually behaves.
The holdback percentage is the first number to test. Typically it sits in the 5 to 20 percent range, and the difference between the ends of that range is enormous. A 6 percent split on a business with a 60 percent gross margin is a manageable drag. A 20 percent split on a business with a 25 percent margin absorbs most of what a sale actually contributes. Model the holdback against gross margin, not against turnover, and check the answer still works in your quietest month.
The collection route matters next. Where your acquirer splits settlements at source, the share never reaches your account and there is nothing to administer, but you also never see the full value of a sale. Where a funder collects by direct debit against card revenue, the money lands first and leaves later, which is easier to reconcile but requires the discipline not to spend it. Neither is better in principle; they suit different businesses.
Flexibility in the percentage is worth asking about explicitly. Some funders will review the holdback if trade changes materially, others will not, and the difference only becomes visible when you need it. Ask directly whether the percentage can be reduced during the agreement and on what basis.
Multiple providers complicate matters. If you take card payments through more than one acquirer, establish which settlements the holdback applies to and whether the agreement requires you to route everything through one route. Businesses have breached agreements without meaning to by adding a second terminal from a different provider.
Criterion three: the delivery period, and what happens if trade changes
An advance has no fixed term, and the duration a funder quotes is a projection from your recent volume rather than a commitment either side has made. Treat it as an estimate and test it against two scenarios: takings 20 percent below your projection, and takings 20 percent above.
The downside case tells you how long the holdback will be sitting on your cash flow. If a projected eight months becomes eleven, can the business live with the reduced settlements for that period, and does anything else you have planned depend on the advance being clear by a certain date? Because there is no term, nothing fails if it takes longer, but nothing warns you either.
The upside case is the one businesses forget. Strong trade delivers the total faster, and because the cost is fixed, faster delivery means the same money paid over less time, which raises the effective annual cost. Growth makes an advance more expensive, not less. That is the opposite of how a loan behaves and it is worth understanding before you sign for one during an expansion.
Ask how the outstanding balance is reported. A funder that shows a running figure in a portal, or sends a statement monthly, makes the arrangement manageable. One where you have to ask for a balance makes planning harder than it needs to be, and that difficulty compounds if you later want to renew, settle early or take advice.
Criterion four: who you are actually contracting with
Because a merchant cash advance provided to a limited company is unregulated, the identity and conduct of the counterparty carry more weight than they would with regulated borrowing. There is no standard disclosure regime standing behind the paperwork, so the paperwork and the company are what you have.
Establish four things before signing. First, which legal entity is providing the funding, taken from the agreement rather than from the website, since embedded platforms frequently fund offers that carry another brand's name. Second, whether that entity is a funder or a broker, because a broker's quote is subject to a funder agreeing. Third, whether the company appears on the Financial Services Register for any regulated activity it carries on, and whether it belongs to a recognised industry association with a code of practice. Fourth, how long it has been trading and what its filed accounts look like, which takes two minutes at Companies House.
Then ask how everyone in the chain is paid. A broker earning a commission from the funder is entirely normal and not a problem in itself, but you are entitled to know it, and a firm that will not answer plainly has answered anyway. The same applies to us: this site is an editorial hub that may earn a fee when it introduces readers to specialists, and we say so on the about page rather than in small print.
The types of company in this market, and what each structure means for the customer, are set out in merchant loan companies. The short version is that direct funders give you one clear counterparty, embedded platforms give you speed inside a familiar brand, acquirer programmes give you the fastest money and the tightest tie-in, and brokers give you breadth if they will name their panel.
Criterion five: personal guarantees
Many advances are supported by a personal guarantee from a director, and this is the clause that most often surprises people afterwards. It should be read before the pricing, not after.
Guarantees on advances are typically framed as a warranty of performance rather than a guarantee of the sum. In broad terms that means the director is not underwriting the risk that trade goes badly, which is the risk the funder priced, but is standing behind the promises made in the agreement: that card sales will not be diverted, that the business will not cease trading without notice, that the information given at application was accurate. A genuine downturn should not trigger it. A breach will.
Three questions get you what you need. What exactly triggers this guarantee? Is my liability capped, and at what figure? Does it end when the advance is delivered, and will you confirm that in writing? If the answers are vague, or if the document reads as an unlimited guarantee of the total rather than a warranty of performance, take legal advice before signing. This is a personal liability against personal assets and it deserves the ten minutes.
An offer without a guarantee is not automatically better either. Funders price for the risk they carry, so a no-guarantee offer may simply carry a higher factor rate. Compare the whole package rather than one term, and decide deliberately how much personal exposure the flexibility is worth.
Criterion six: fees, early settlement and what happens next
The remaining terms are less dramatic and are where a good offer quietly separates itself from a mediocre one.
- Fees outside the factor rate. Arrangement, administration or documentation fees raise the real total above what the multiplier implies. Ask whether the factor rate is inclusive, and get the total in pounds.
- Early settlement. Because the total is fixed, clearing early does not reduce it automatically. Some funders offer a discount as a commercial concession. Ask whether yours will, on what basis, and get the answer in writing, because it is not a right.
- Renewals and top-ups. Most funders will consider further funding once a proportion of the current advance has been delivered, often somewhere past the halfway mark. Understand whether a top-up replaces the existing agreement or runs alongside it, because two live holdbacks on one revenue stream is a materially different proposition from one.
- Reporting and access. A portal showing the balance and the collection history costs nothing to provide and makes the arrangement far easier to manage.
- Notice obligations. Check what you are required to tell the funder about, and when. Changing acquirer, opening a second merchant account, selling the business or restructuring will usually require notice or consent.
Then read the clauses about what counts as a breach, which are the operative risk in the agreement. The cost lines get read twice by everyone; the conduct clauses get skimmed, and they are the ones that decide what happens if your circumstances change.
Running a shortlist
A workable process takes about a week and produces a genuinely comparable set of offers.
Gather three quotes from different routes. One from your existing payments provider if it has made an offer, one from a direct funder approached yourself, and one through a broker who will name the panel. Three is enough to see the spread; more usually adds noise rather than information.
Ask every provider the same seven questions. The total deliverable in pounds including fees. The holdback percentage. The expected delivery period on your current volume. Which entity is funding. Whether a personal guarantee is required and what triggers it. Whether early settlement attracts a discount. What happens if you change card processing provider.
Put the answers in a table and compare like with like. Rank on total cost first, then on how the collection mechanism sits against your margin and your quietest month, then on the counterparty and the guarantee. Speed comes last unless the money is genuinely needed this week, because paying a premium for two days is rarely a good trade.
Then negotiate. Factor rates and holdback percentages are commercial terms, not tariffs, and a business with strong, consistent card takings has more room than it usually realises, particularly when a competing offer exists. The worst outcome of asking is that the answer is no.
Red flags
Some things should stop a conversation rather than prompt a negotiation. None of these is subtle, and all of them appear in this market.
- A refusal to state the total in pounds. There is no legitimate reason for it.
- Any upfront fee before an offer exists. Advance fee arrangements are a well-known pattern of fraud in business finance. Legitimate brokers are paid on completion.
- Pressure to sign today. Genuine offers survive a night's reflection, and expiring rates are a sales technique rather than a funding constraint.
- Encouragement to stack a second advance on an existing one. A funder willing to add a second holdback to a revenue stream already carrying one is not managing your risk.
- Vagueness about who is funding. If the entity in the agreement is not the brand you have been dealing with and nobody will explain the relationship, stop.
- An unlimited personal guarantee of the full total. That is not the normal shape of a guarantee on an advance and warrants legal advice before signing.
- Promises of guaranteed approval or no credit check at all. Underwriting on card volume is not the same as no underwriting, and firms advertising the latter are usually selling your data.
None of this means the market is disreputable. Most established UK funders document these arrangements clearly and behave properly, and for many card-taking businesses an advance is the only realistic funding available. It does mean the diligence is yours to do, because the regulatory framework that usually does it for borrowers is largely absent here.
What best looks like for different businesses
The criteria are constant; the weighting shifts with the business.
A seasonal business should weight the collection mechanism above almost everything. The whole value of an advance to a seaside cafe or a Christmas-heavy retailer is that a dead quarter delivers less, so the holdback percentage and the funder's willingness to review it matter more than a small difference in factor rate.
A high-volume, thin-margin business should weight the holdback against gross margin first, and should look hard at whether an unsecured business loan is achievable instead. A 15 percent split on 20 percent margins is a heavier burden than the headline suggests, and if the balance sheet supports term borrowing, the total cost saving is usually decisive.
A business with bad credit history should weight the counterparty and the guarantee. Options are narrower, which makes the temptation to accept the first yes stronger, and it is precisely then that the conduct clauses and the personal exposure deserve the most attention. Two offers are still better than one, even when both come from funders you had not heard of a fortnight ago.
A business already inside an acquirer programme should weight the tie-in. The money is fast and the administration is minimal, but check your processing rates are competitive before locking yourself to that provider for the life of the advance.
A growing business should weight the delivery period and the renewal terms. Growth shortens delivery and therefore raises the effective cost, and a funder whose renewal process is clear is worth more than one whose factor rate is marginally lower.
In every case the same sentence applies. The best merchant loan is the cheapest total, on a collection mechanism your margins can carry through your worst month, from a counterparty you have identified, on terms you have read. If those four hold, the offer is a good one whatever the brand on the paperwork.