Here is the typical fee structure of an unsecured business loan. The fees listed below are those you can expect to pay beyond your normal interest rate.
Initiation Fee
Most lenders will charge you a nominal initiation fee to get your MCA facility up and running. This should not be a high figure. If it is, reconsider the lender you are working with.
Monthly Fee
This is a cost that some lenders will merge into your normal interest rate or cost of loan. Others will not. It generally covers the monthly processing of your loan.
"Long" Payment Fee
Late payment is technically not possible with an MCA, but if you take too long to repay (a period that will be stipulated in your contract), a fee might be incurred.
Is a merchant cash advance right for your business?
Here are some details which will help you decide whether a MCA is a good option for your business.
Smaller Financer
Traditional Bank
Funding Amounts
R10k to R5M
R500k to R5M
Speed of Funding
As little as 24 hrs
Multiple weeks
Fee Structure
Fully transparent
Often hidden fee's
Who Qualifies
No collateral required
Needs collateral
Early Settlement Penalties
Discounts for early settlement
Often penalties for early settlement
Repayment Structure
Flexible. Pay as you earn options.
Rigid, inflexible.
Merchant Cash Advance
Traditional Bank Loan
Funding amounts
R10k to R5M
R1M+
Speed of funding application
As fast as 24 hours
Weeks to months
Fee structure
Factor rate
Interest rate
Best for
Business with a card machine
Business that owns a property
Early settlement
No discounts because total loan cost is fixed
Often penalties for early repayment
Repayment structure
You repay proportionally to your earnings. No income = no repayment.
Inflexible repayment structure. Normally over longer-terms.
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