Merchant Cash Advance Solution For Ecommerce Business

The Scenario

Our client was an up-and-coming online clothing retailer based in the UK, and had been in business for just over two years.

The company had seen steady growth since its inception, but had recognised a huge opportunity to capitalise on the upcoming Black Friday and Christmas shopping rush.

But as a relatively new business, they didn't have the established credit history required for a traditional bank loan.

The Solution

After consulting with Clifton Private Finance, our adviser looked at the business’s trading history, balance sheet, growth trajectory, and broader plans and ambitions to ascertain the best route to funding in terms of cost, loan value, and flexibility.

We introduced them to a merchant cash advance product as a solution - a finance option that's particularly effective for e-commerce businesses.

Here's how it worked:

• The company received a lump sum of £100,000 within a week of application, allowing them to immediately place orders for additional inventory.
• Instead of fixed monthly payments, the repayment was structured as a percentage of the company’s daily card transactions. This meant that repayments automatically scaled with the business's income, keeping the risk low.
• The percentage-based repayment model was particularly beneficial for the company’s seasonal business. During the busy holiday period, they would repay more, but during slower months, the repayment amount would decrease accordingly.
• Unlike a traditional business loan, there was no fixed repayment term. This gave them peace of mind knowing that a slow month wouldn't put them at risk of missing a payment.
• And the merchant cash advance didn't require any collateral, which was ideal for an e-commerce business with limited physical assets.

The outcome was highly positive for the business. With the additional inventory, the company was able to take advantage of the surge in demand during the Black Friday and Christmas period.

And, the boost in sales helped establish stronger relationships with suppliers and increased the company's visibility in the market.