What Is A BCA?
In commercial finance, BCA stands for Business Cash Advance.
It is a form of funding for businesses that take card payments. The lender advances a lump sum based on your average card takings, and you repay it as an agreed percentage of each day’s card sales until the balance is cleared.
A Business Cash Advance and a Merchant Cash Advance are the same product. You will also see it called a merchant loan, a card machine loan or a revenue advance. The naming varies by provider; the mechanics do not.
How Repayment Works
This is what makes a BCA different from a term loan. There is no fixed monthly payment. Instead a set percentage — often somewhere between 10% and 20% — is taken from your card settlements automatically.
The practical effect is that repayments flex with trade. A strong month clears the balance faster; a quiet month costs you less. For seasonal businesses that is genuinely useful, because the facility breathes with the takings rather than demanding the same figure in February as in December.
How The Cost Is Expressed
Not as an interest rate. A BCA is priced using a factor rate — a multiplier applied to the amount advanced.
Advance £30,000 at a factor rate of 1.2 and you repay £36,000 in total, however long it takes. The total cost is fixed at the outset and does not reduce if you repay quickly, which is the key difference from interest-bearing borrowing.
That also means a factor rate cannot be compared directly with an APR. Converting one to the other requires assumptions about how fast you will repay, and the shorter the repayment period, the higher the equivalent annualised cost.
Who It Suits
- Retail, hospitality, salons, garages, leisure — anything with consistent card revenue
- Businesses needing funds quickly, often within 24 to 72 hours
- Businesses with limited assets to offer as security
- Businesses with some adverse credit, since the advance is underwritten primarily on takings — see business loans for bad credit
It suits businesses less well where card takings are a small share of turnover, or where the sum needed is large relative to monthly revenue. In those cases a business loan or invoice finance is usually the better structure.
Related: MCA, factor rate.
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