Business Funding Glossary
The funding world is full of jargon and acronyms nobody asked for. This glossary covers the terms you'll actually come across when looking at business funding options in the UK in 2026. Plain English, no waffle.
Last updated: April 2026
Merchant Cash Advance (MCA)
A lump sum given to your business in exchange for a percentage of your future card sales. Repayments go up when you're busy and down when you're quiet. Not technically a loan.
Learn more →Factor Rate
The number used to calculate the total cost of a merchant cash advance. If you borrow £10,000 at a factor rate of 1.2, you repay £12,000 in total. It's not the same as an interest rate.
Learn more →APR (Annual Percentage Rate)
The yearly cost of borrowing, shown as a percentage. Used mainly for traditional loans and credit cards. MCAs don't typically use APR because repayment length varies with your sales.
Personal Guarantee (PG)
A promise that you'll personally repay the debt if your business can't. Most business funding providers require one. In the MCA space, personal guarantees are typically not asset-based, meaning your property isn't directly at risk, but you should always read the terms carefully.
Unsecured Funding
Funding that doesn't require you to put up property or assets as security. Most merchant cash advances are unsecured. You're not risking your house or car.
Secured Funding
Funding where you offer an asset (like property or equipment) as security. If you can't repay, the lender can claim that asset. Usually comes with lower rates because the lender's risk is lower.
Revenue-Based Finance (RBF)
A type of funding where repayments are a fixed percentage of your monthly revenue. Similar to an MCA, but can be based on total revenue rather than just card sales.
Learn more →Term Loan
A lump sum you borrow and repay in fixed monthly instalments over a set period (the "term"). The amount you pay each month stays the same regardless of how your business is doing.
Soft Credit Check
A credit check that doesn't show up on your credit file and won't affect your credit score. Most MCA providers use these for initial assessments. You can apply without worrying about your score taking a hit.
Hard Credit Check
A credit check that does appear on your credit file. Too many in a short period can lower your score. Traditional lenders like banks usually run these before making a decision.
Holdback Percentage
The percentage of your daily or weekly card sales that goes towards repaying your MCA. If your holdback is 10% and you take £1,000 in card payments today, £100 goes to the lender.
Settlement Period
The time it takes for card payments to actually land in your bank account after a customer pays. Some providers offer next-day settlement, others take 2-3 working days.
Introducer
A company (like CapExpand) that connects businesses with lenders. We don't lend money ourselves. We compare providers on our panel and introduce you to the ones most likely to suit your business.
Underwriting
The process a lender goes through to decide whether to approve your application and on what terms. Each lender has its own underwriting model, which is why the same business can get different answers from different providers.
Risk Appetite
How much risk a lender is willing to take on. Every lender has a different risk appetite, which is why some approve businesses that others turn down. Think of it like car insurance: same driver, different quotes.
Advance Amount
The lump sum you receive upfront from an MCA provider. That's the amount before any fees or costs are added on top.
Total Repayable
The full amount you'll pay back, including the original advance plus all fees and costs. With an MCA, this is calculated by multiplying the advance by the factor rate.
Renewal / Top-Up
Once you've repaid a portion (usually 50-70%) of your existing advance, some providers let you take out additional funding on top. The terms may differ from your original agreement.
Daily Deduction
The amount taken from your card sales each day to repay your MCA. It's automatic. On days when you take fewer card payments, the deduction is smaller.
Funding Speed
How quickly money lands in your account after you're approved. In the UK business funding market in 2026, most MCA providers fund within 24 to 48 hours. Some offer same-day.
Minimum Trading History
The shortest time your business needs to have been trading before a lender will consider you. Ranges from 3 months (some MCA providers) to 2+ years (most term loan providers).
Minimum Card Turnover
The lowest monthly card sales a lender requires. Different providers have different thresholds. Some start as low as £1,500 per month, others need £10,000+.
PCI Compliance
Payment Card Industry Data Security Standard. Rules your business has to follow if you take card payments. When switching card machine providers, you need to make sure you stay compliant during the transition.
Interchange Fee
A fee charged by the card network (Visa, Mastercard) on every transaction. It's built into your card processing costs. The rate depends on the card type and whether the customer is present.
Interchange++
A transparent pricing model for card processing where you see the interchange fee, the card scheme fee, and the processor's markup separately. Often cheaper at higher volumes than flat-rate pricing.
Flat-Rate Pricing
A card processing pricing model where you pay the same percentage on every transaction regardless of card type. Simple to understand, but can work out more expensive at higher volumes.
Next-Day Payouts
When money from card payments lands in your bank account the following business day. Not all providers offer this. It makes a real difference to cash flow, especially for hospitality and retail.
Growth Guarantee Scheme (GGS)
A UK government-backed scheme that encourages lenders to provide finance to smaller businesses. The government guarantees a portion of the loan, which reduces the lender's risk.
Learn more →CCJ (County Court Judgment)
A court order that says you owe money. Having a CCJ on your record can make it harder to get traditional finance. Some MCA providers can still work with businesses that have CCJs.
Flexi-Loan
A loan where you can draw down and repay flexibly, a bit like an overdraft. You only pay interest on what you've actually borrowed. Providers like iwoca offer this type of product.
Broker Fee
A fee some brokers charge for arranging funding. CapExpand does not charge businesses any fees. Our service is free to you. We're paid by the lender when funding completes.
Drawdown
The act of taking money from an approved credit facility. With a flexi-loan, you might be approved for £50,000 but only draw down £20,000 initially.
Working Capital
The money your business uses to cover day-to-day expenses like rent, stock, wages, and bills. Many businesses use MCAs or short-term funding to top up their working capital.
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