Merchant Capital is a Johannesburg-based fintech lender established in 2012, specialising in providing unsecured, asset-free growth capital to South African SMEs. The company primarily caters to businesses in the retail sector, offering tailored financing solutions to support business growth.
Eligibility Criteria
To qualify for a Merchant Capital Cash Advance, your business must meet the following requirements:
- Business Registration: Be a registered company or close corporation in South Africa.
- Monthly Turnover: Have a consistent monthly turnover of at least R50,000.
- Operational History: Maintain a trading history of more than 12 months.
- Ownership: At least one business owner must be a South African citizen or provide a guarantor.
- Lease Agreement: Present a valid lease agreement or proof of property ownership.
Application Process
Merchant Capital offers a straightforward application process designed to accommodate busy business owners. Applications can be completed online or in person.
- Online Application:
- Fill out a simple online form with your:
- Contact details
- Monthly turnover (card, cash, and EFT)
- Company and personal information
- Upload required documents, including:
- Proof of residence
- Supplier statements
- Bank statements for the last six months
- Once submitted, you will receive guidance on the next steps and any additional documentation needed.
- Fill out a simple online form with your:
- In-Person Consultation:
- For those who prefer a personal touch, Merchant Capital provides an option to meet with a sales executive who will assist with the application process.
- They guide you through each step, ensuring all requirements are met for a faster approval process.
With all required documents submitted, approval typically takes 24 to 48 hours.
Funding Details
- Advance Amount: Businesses can qualify for up to 100% of their average monthly credit and debit card turnover.
- Merchant Capital reviews your financial statements to determine a precise funding amount.
Repayment Options
Merchant Capital offers flexible repayment methods designed to align with the unique revenue patterns of small businesses:
- Percentage of Card Sales:
- A fixed percentage is automatically deducted from each credit or debit card sale.
- Repayments adjust to the business’s daily sales, meaning if sales decrease, repayment amounts also decrease.
- This method ensures that repayments are manageable during periods of lower revenue.
- Fixed Daily or Weekly Withdrawals:
- A predetermined amount is debited from your business account daily or weekly.
- This option offers predictability, allowing you to budget accurately.
Refinancing and Top-Ups
- Re-advance Eligibility: Businesses that have repaid 70% of their initial advance may qualify for additional funding. This allows access to cash when needed without restarting the entire application process.
- Top-Ups: If you initially borrowed less than your eligible amount, you can top up your advance at any point in the funding cycle.
Shari’ah-Compliant Financing
Merchant Capital provides a Shari’ah-compliant working capital solution. This ethical financing option adheres to Islamic financial principles, allowing businesses to access funding without compromising their beliefs.
Competitive Advantages
- Flexible Repayments:
- Repayments based on sales performance offer relief during slow periods.
- Businesses do not need to worry about fixed repayments during downturns.
- Unsecured Financing:
- No collateral is required, meaning you don’t risk personal or business assets.
- Fast Turnaround:
- Funds are typically available within 24 hours of approval, enabling businesses to address urgent needs promptly.
- Refinancing Opportunities:
- Once 70% of the current loan is repaid, businesses can access additional funding.
Potential Disadvantages
- Cost of Borrowing:
- Merchant Capital’s cash advances generally have a higher cost compared to traditional loans. Borrowing costs, including fees and interest, can exceed 15% annually.
- Risk of Debt Cycles:
- The ease of accessing refinancing can lead to a cycle of debt if businesses do not manage repayments carefully.
Industries Served
Merchant Capital caters to a wide range of retail businesses, including:
- Building and hardware stores
- Restaurants and fast-food outlets
- Supermarkets
- Liquor stores
- Hair and beauty salons
- Nurseries
- Butcheries
- Electronics stores
- Fuel stations
Conclusion
Merchant Capital’s Cash Advance is a viable solution for South African SMEs seeking quick and flexible financing without the need for collateral. While the cost of borrowing may be higher than traditional loans, the flexibility and speed of access make it an attractive option for businesses experiencing seasonal fluctuations or requiring urgent funding.
Merchant Capital empowers businesses by aligning repayments with sales performance, allowing companies to focus on growth while managing cash flow effectively.
