A merchant cash advance can give a UK business an upfront sum while collecting repayments from card sales. For a Teya customer, the key question is whether the proposed deductions leave enough cash for stock, wages, premises costs and tax throughout the funding period.
Start with the written offer and your own trading records. A funding amount displayed in an app is not a substitute for checking the total amount payable, the collection percentage and what happens during a quiet trading period.
How Teya’s cash advance works
Teya describes its cash advance as funding delivered through partners, including Liberis, YouLend and iwoca, for businesses taking most of their payment volume through Teya. Its published explanation sets out an upfront fixed fee and collections based on a percentage of daily card sales. A partner’s minimum repayment requirement can still apply. Eligibility depends on the provider’s assessment, and a limited company or LLP may need to provide a personal guarantee. The agreement identifies the provider and the terms that apply to your business. Source: Teya’s cash advance guidance.
That combination matters: daily collections can change with sales, while a separate minimum obligation may remain. Check both before deciding that the arrangement fits seasonal trading.
Separate the fee from the sales deduction
Two percentages can describe very different things. A fee expressed as a proportion of the advance describes the funding cost. A percentage collected from sales describes the pace at which money leaves your business.
For example, suppose an entirely hypothetical offer provides £15,000 and adds a £2,250 fixed fee. The total payable would be £17,250. If collections were 12% of eligible card sales, a £1,000 sales day would generate a £120 collection, assuming the agreement uses that sales figure as its collection base.
The 12% deduction would not mean the funding costs 12%. In this example the fee equals 15% of the original £15,000, before considering any other charges. Neither figure, on its own, is an annualised borrowing rate.
These numbers are illustrative and are not a Teya quotation. Your offer may have different amounts, definitions, conditions and collection arrangements.
Build the affordability check around cash retained
A busy till can hide a shortage of usable cash. Card receipts must still support the costs of producing the sale and running the business.
Consider the following simplified monthly planning exercise:
| Planning item | Illustrative amount |
|---|---|
| Eligible card sales | £30,000 |
| Collection at an assumed 12% | £3,600 |
| Card sales remaining before other outgoings | £26,400 |
| Other operating cash outgoings | £24,000 |
| Remaining cash before items not included above | £2,400 |
This is a cash planning example, not an accounting profit calculation. You must define whether the operating outgoings include processing charges, tax payments, refunds, existing finance and owner withdrawals. Missing a large quarterly payment can make a comfortable-looking forecast misleading.
Now consider £24,000 of eligible sales. The assumed collection falls to £2,880, leaving £21,120 before other outgoings. If operating payments remain £24,000, the business faces a £2,880 shortfall. Collections have reduced, but the business still has a cash deficit.
Build at least a normal case and a weaker-sales case. Where stock purchases fall with sales, adjust them realistically; where rent and salaries remain due, keep them in the forecast. Check the agreement’s minimum repayment conditions separately from these illustrative sales-based calculations.
Use card statements that explain the business clearly
Prepare a consistent set of records rather than sending whichever screenshot shows the strongest month. Useful information to have available includes:
- Recent card processing statements covering representative trading periods.
- Business bank statements showing when settlements arrive.
- A breakdown of refunds, chargebacks and unusual adjustments.
- Details of existing finance payments and outstanding balances.
- The proposed use of funds and the timing of the expenditure.
- An explanation of seasonal closures, ownership changes or changes in trading model.
Confirm the actual documentation requirements with the provider. This preparation list is a practical starting point, not a statement that every item is compulsory for every Teya application.
Keep turnover and bank settlements distinct. A customer payment, a processor settlement and the resulting bank credit may all refer to the same sale. Counting each as separate revenue would overstate the business’s performance.
If you use multiple payment channels, identify which sales feed the proposed collections. Do not assume an online payment account, a second location or another terminal provider is included automatically.
Match the funding to a measurable use
A useful funding proposal explains what the cash will change and when the benefit should arrive. “Working capital” is often too broad to test on its own.
For a stock purchase, list the purchase cost, expected selling period, gross margin and allowance for slow-moving inventory. If the stock takes several months to sell, include the collections that occur before those sales generate cash.
For an equipment replacement, compare the funding cost with the operational benefit: fewer repairs, less downtime, additional capacity or lower operating costs. Avoid treating all additional revenue as additional profit.
For a refurbishment, allow for disruption. A forecast that assumes normal sales throughout a temporary closure can materially understate the cash required.
If the advance mainly covers recurring losses, calculate how the business will fund the following month once the advance is spent. A short-term injection does not itself correct a continuing mismatch between income and costs.
Review the agreement before accepting
Ask for clear written answers to these questions:
- How much cash reaches the business after any deductions?
- What is the total contractual amount payable?
- Which sales figure determines daily collections?
- How are refunds, chargebacks and delayed settlements treated?
- What minimum payments, deadlines or other obligations apply?
- What happens if trading stops temporarily or sales fall sharply?
- Is a personal guarantee required, and what does it cover?
- How are changes to the payment provider or business ownership handled?
The purpose is to understand the actual obligation, not merely the headline funding amount. If an answer affects affordability, put it into the cash forecast before accepting.
Teya’s published guidance also says that early settlement does not reduce the original fixed fee, and switching acquirers may affect access to deal-management tools. Ask the named funding provider how either decision would work for your agreement. Source: managing a Teya cash advance.
Compare alternatives using the same assumptions
Compare offers on the same net funding amount and proposed business use. An offer that provides more cash is not automatically better if it creates a larger collection burden than the business can support.
For each option, record net proceeds, total payable, payment timing, any security or guarantee, early settlement terms and the effect of a weaker sales period. Include changes in payment processing costs if moving provider forms part of the proposal.
Depending on the need, alternatives to investigate may include a business loan, an overdraft or asset finance. Availability and suitability depend on the provider and your circumstances. Equipment with a useful life of several years may merit a different funding structure from a short stock cycle.
Do not compare a fixed advance fee directly with a loan’s annual interest percentage. Timing and the pattern of repayments affect the comparison. Obtain comparable total cost figures and assess the cash impact of each offer.
Frequently asked questions
Does using Teya guarantee a funding offer?
No. Being a payment customer is not the same as receiving approval. Check whether an offer is available and what conditions the named provider applies to your business.
Will quieter sales remove every payment obligation?
Do not assume so. Sales-based collections and minimum repayment obligations are separate points to check in the agreement. Model the quiet period and confirm how any minimum would be met.
Should I take the largest amount offered?
Start with the amount needed for the business purpose and a justified contingency. Then test the associated collections against operating costs. Available funding and affordable funding are different calculations.
What should I prepare before comparing funding?
Bring recent processing and bank statements, details of existing finance, a clear funding purpose and a short cash forecast. These make it easier to compare proposals on consistent information.
Discuss the funding requirement
If you want to explore business funding, contact Mehmi Financial Group with the amount required, intended use and your recent trading figures. Ask which options are available for your circumstances and compare their written terms before deciding. This article does not imply that Mehmi Financial Group is affiliated with Teya or its funding partners.