A novel lending product has arrived in the UK that’s changing the way businesses are financed.
Merchant Money’s Pay As You Trade product is an up-front lump sum that is repaid based solely on a business’s future earnings, with no fixed term or fixed installments.
The company recently introduced the product to augment their unsecured flexi-loan offering, which has helped finance hundreds of businesses across the UK over the past three years.
The PAYT product offers clients advances from £3,000 upwards, based on their future credit card sales. The only charge is an affordable, agreed-upon fee, to be repaid in installments – a small fixed percentage of the business’s daily card transactions, automatically withdrawn until the advance is repaid.
“Because repayments rise and fall based on the strength of their sales, businesses never need to worry about being short at the end of the month,” says Girnun. “With no fixed term to the repayments, there’s never any pressure.”
“There’s no interest rate, no security requirements; clients can settle the full amount whenever they want – and repayments are tied only to card sales, which means cash sales aren’t deducted.”
“The only requirement is that applicants transact a minimum of £3,000 in monthly card sales for a period of at least six months. PAYT is so accessible,” says Girnun, “that Merchant Money’s approval rate for the product stands at 90%.”
“Once approved, our clients can channel the funds any way they choose. Whether it’s for a re-stock or even to open a new business, we partner with our clients’ businesses, giving them the support they need to grow.”
Crucially, Merchant Money only gets paid when their clients get paid. “It’s a genuine investment in their business,” says Girnun.
As of 2013, the PAYT industry was estimated to be funding $3 billion a year to business and was only recently introduced in the UK. In the wake of Brexit, GDP growth slowing, and banks tightening their lending practices, PAYT has arrived at an opportune moment.
“When we explain that repayment is linked to earnings – our client’s eyes light up,” says Girnun. “So many businesses find funding hard to come by and repayment terms insurmountable. PAYT seems to be exactly what’s needed.”