More garages than ever are benefiting from merchant cash advances, a recent survey has found. The study found that, of the 200 MOT and repair centres asked, 18% are currently using a merchant cash advance product or have done in the past. This is an increase of 4% since 2014.
Alternative finance products have gone from strength to strength in recent years, as banks left many small businesses with less access to the funds they needed to grow following the downturn. Car repair garages are no different, and it appears that merchant cash advances in particular are proving very popular.
We spoke with Rapid Repair, an MOT and servicing garage based in Hull. Owner Richard Parry looked into alternative forms of finance back in October 2015 after being turned down by his bank. “We were unable to raise the cash we needed through the bank late last year. Winter is notoriously slow in this industry, as many simply can’t afford to spend on their cars with Christmas and new year”.
Richard, who now has 8 staff members, approached a merchant cash advance lender. “We had no idea there was a finance product like this. Most of our customers pay for their repairs by card nowadays, so it made sense that we raised funds based on these transactions. The lender assessed how much we take in card sales per month and advanced us funds accordingly. We now repay the finance through future card sales”.
“The main benefit for us is that it aids our cash flow. Because we have already agreed on a percentage of our sales being used to repay the loan, when we have a slow month or season, our repayments reduce too. It’s a great way to raise cash and keep things moving forward”.
If your garage accepts card payments and you’re exploring ways to raise funds for any purpose, get in touch with Merchant Loan Advance today and discover what could be available for you.