Merchant Finance for Hotels

Merchant Finance is a form of unsecured finance supplied specifically to businesses such as hotels where a large proportion of revenue comes from customers paying on credit cards.

How Merchant Finance works

  • The lender provides you with an unsecured loan which is repaid to the lender out of future credit and/or debit card receipts.
  • An agreed percentage (typically 20%) of your future credit card and debit card sales are deducted from your daily Visa/MasterCard receipts until full repayment is made.
  • The collection process is totally automated through the card processor thus eliminating the need for you to write cheques or send money.
  • All transactions are handled by your card processor with the same degree of safety and accuracy that you're accustomed to receiving.

This is actually a discounting facility, where you are simply selling future income, today at a pre agreed rate. The lender is not a bank, there is no interest, no bank managers, no hidden fees

How much can be borrowed?

Typically this is one month’s worth of credit/debit card takings. Subject to a minimum of £3,500 and a maximum of £100,000.
The payback period is not fixed because it's based on your actual Visa/MasterCard receipts. More will be paid back when takings are high, less when takings are low. The average payback period is around 7 months.
In most cases, finance will be provided within 5- 7 business days of your application being received. You will receive monthly statements and you can check your balance daily.

Funding Criteria

To qualify for this form of finance, you need to have:

  • An average of at least £3,500 in monthly Credit/Debit Card sales.
  • At least 4 months of VISA/MasterCard statements to determine the funded amount.
  • Provide at least three trade references.
  • Supply landlord information to verify that you are up to date with your rent and have at least one year remaining on your lease.
  • You must be in good standing with your card processor.

What can I use the money for?

Pretty much anything you want, in our experience most hotels have used the money for :

  • refurbishment
  • assisting towards a deposit for a new acquisition
  • advertising
  • stocking up on seasonal merchandise.
  • catch up on debt arrears
  • to reduce excess overdraft

The main issue to bear in mind that this is SHORT TERM funding, to enable you to get cash quickly. It will be repaid from your credit card takings AUTOMATICALLY over a 6 or 7 month timescale. This is not a long term finance facility.

But, it just might be the difference between success and failure.

SCR Office
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Sterling Commercial Finance Limited is a Broker not a Lender.
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