SMEs to borrow against card sales with Linked Finance
Merchant Cash Advance allows for flexible repayments that scale with a business’s sales
Digital lending platform Linked Finance has launched a new lending product that allows businesses to unlock their daily cash flow from card payments as a funding source.
Merchant Cash Advance will allow businesses to borrow a lump sum and then pay it back gradually through a percentage of their daily card receipts. This gives businesses the ability to vary their level of reimbursement based on the level of daily turnover: as the business grows, they repay more, faster; during lulls, they repay less.
The solution is ideal for businesses that receive a significant portion of their sales by debit or credit card payment, in-store or online, such as retail stores, beauty salons, restaurants, pubs and services such as gyms, where memberships are processed using card payments.
An advance can be used for a wide range of reasons to support business growth, including regular cash flow, stock purchase, hiring new staff, office expansion and purchase of equipment.
Linked Finance sees demand coming from the growing number of online-only retailers in Ireland, who generally only accept card payments. During the pandemic, there has been a sea change in online retail trends, with e-commerce revenue for retailers increasing by 159% in 2020.
Paying by card is a growing trend as we move closer to a cashless society, and according to the Central Bank of Ireland, over €61 billion was spent at the point of sale on cards in 2021, up 18% over the previous year2. Transaction volumes up 21% with over 1.5 trillion payments made on the 7.5 million credit and debit cards in existence in Ireland.
Repaying a merchant cash advance is hassle-free as it will be automatically deducted “at source” from card payments thanks to Linked Finance’s partnership with payment software company Fire. Fire was chosen as a partner because of its track record and speed of settlement, enabling Linked Finance to provide the best possible experience for borrowers. He represents two successful Irish fintech companies coming together to disrupt incumbents. Companies do not need to change banks to benefit from this new line of credit, only a change of merchant settlement account is required.
The amount of advances can range from €10,000 to €150,000 with repayments made over a period of up to 12 months and interest rates starting at 4% per annum. Borrowers will be assessed as part of Linked Finance’s loan eligibility review and receive a decision within 24 hours. Companies must have been in existence for 2 years and have an annual turnover of more than €100,000.
Merchant Cash Advance will offer Linked Finance’s 27,000 lenders a new option to support SMEs in Linked Finance’s online marketplace, with approved loans available to lenders starting at €50 in the same way as our term loan product .
“With our payment card usage rapidly increasing, today’s launch of Merchant Cash Advance provides SMBs with a flexible way to access cash that can be redeemed in a way that is directly tied to business trends in the market. business,” Niall O’Grady said. , CEO of Linked Finance. “It’s a proven success story for international online retailers, so we’re excited to bring it to the Irish online retail sector, particularly hospitality and services. Daily refunds are issued automatically to from card sales, leaving business owners free to focus on growing their business.
Merchant Cash Advance will be offered alongside the core term loan offering from Linked Finance, which last year issued loans worth more than €36 million, an increase of 80% on to 2020. Since its inception in 2013, Linked Finance has grown rapidly to provide over €182 million to more than 3,000 ambitious local businesses in every county across the country.
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