Merchant Cash Advance With Chargebacks UK: Can You Still Get Funding?

Can you get a merchant cash advance in the UK if your business has chargebacks?

Yes, potentially. Having chargebacks does not automatically disqualify every UK business from merchant cash advance funding. However, frequent payment disputes, unresolved chargebacks, high refund volumes and restrictions on your merchant account can make approval more difficult.

Merchant cash advance (MCA) providers assess the reliability of your debit and credit card sales because these transactions typically provide the revenue used to repay the advance.

A business with occasional historical chargebacks, consistent sales and documented dispute resolutions may present a different risk profile from a business experiencing repeated customer disputes, declining revenue or frozen card-processing settlements.

Importantly, there is no universal UK chargeback percentage that guarantees merchant cash advance approval. Each funding provider applies its own eligibility requirements and risk assessment.

For example, Square's UK funding guidance specifically identifies significant payment disputes during the preceding 12 months as a possible reason for declining a cash advance application. It also considers payment reserves and processing restrictions.

This guide explains how UK merchant cash advance providers assess chargebacks, how disputes affect available card revenue, what documentation can help an application and when alternative business financing may be more appropriate.

Can You Get a Merchant Cash Advance With Chargebacks in the UK?

A business with a history of chargebacks may still be considered for merchant cash advance funding, depending on the provider and the circumstances behind those disputes.

The key question is whether the business continues to generate sufficient reliable card revenue to support the proposed funding arrangement.

Providers may examine:

Chargeback frequency: How often customers dispute transactions.
Chargeback value: How much money has been reversed or remains at risk.
Dispute history: Whether problems are recent, recurring or largely resolved.
Reasons for chargebacks: Fraud, delivery failures, billing errors, cancellations or customer dissatisfaction.
Merchant account status: Whether card-processing facilities remain active without significant restrictions.
Refund activity: Whether refunds and reversals materially reduce available turnover.
Sales consistency: Whether the business maintains dependable debit and credit card receipts.
Existing commitments: Whether outstanding advances, loans or other obligations already consume operating cash flow.

An otherwise profitable business could face difficulty obtaining funding if a large portion of its card revenue is disputed or withheld.

Conversely, a business that experienced an isolated dispute months earlier, resolved the underlying issue and maintained stable payment processing may have a stronger case for consideration.

Neither situation guarantees a particular funding outcome.

The British Business Bank's merchant cash advance guide explains how this form of funding operates through future card sales and highlights its potential costs and cash-flow risks.

What Is a Chargeback, and Why Does It Matter for Business Funding?

A chargeback occurs when a cardholder disputes a debit or credit card transaction through their card issuer and the payment is reversed through the applicable card scheme process.

Unlike an ordinary refund initiated by a merchant, a chargeback involves the cardholder's issuing bank, the card payment network and the merchant's payment-processing provider or acquiring bank.

Chargebacks can arise when:

A customer does not receive goods or services.
Goods are defective or materially different from their description.
A card payment was unauthorised.
A customer does not recognise a transaction.
A subscription or recurring payment is disputed.
An agreed refund has not been received.
A transaction was processed incorrectly or more than once.

Not every chargeback involves fraud or wrongdoing by the business. Legitimate customer complaints, processing errors and unauthorised payments can all result in disputes.

According to UK Finance's guidance on chargeback rights, chargeback is an industry scheme operating under card network rules. Customers generally have a limited period to bring claims, commonly around 120 days, although the applicable deadline depends on the circumstances.

For a merchant cash advance provider, the concern is not simply that a dispute exists. It is whether payment reversals threaten the stability and collectability of future sales.

Chargebacks versus refunds

A refund and a chargeback can both reduce the revenue available to your business, but they are not interchangeable.

A refund is generally initiated by the merchant to return money to a customer. It may occur because of a return, cancellation, pricing error or customer service issue.

A chargeback follows a formal payment dispute through the cardholder's issuer and applicable card scheme procedures.

Both can affect the business's net payment receipts. Chargebacks may introduce additional processing fees, monitoring concerns and the possibility of payment restrictions.

A business with a high refund rate may still attract scrutiny even if its formal chargeback rate is relatively low.

What is a merchant account reserve?

A payment reserve is money temporarily withheld by a payment processor to manage potential liabilities, such as future chargebacks.

For example, a processor may retain a portion of card settlements for an agreed period before releasing the funds, subject to its contractual rules.

The reserved money is not necessarily lost revenue, but it may be unavailable for immediate operating expenses.

This distinction matters for merchant cash advance applications because a business can report substantial card turnover while receiving much less cash into its bank account.

Square's UK guidance on merchant cash advance eligibility explicitly identifies reserves as a negative factor that can affect funding eligibility.

How Merchant Cash Advance Providers Assess Chargebacks

There is no single underwriting formula used by every UK merchant cash advance provider.

However, reviewing card-processing performance, payment reversals and the reliability of incoming revenue provides a practical framework for understanding why some applications involving chargebacks are more difficult than others.

1. Chargeback frequency and transaction history

Providers may look beyond the total value of card sales to understand how frequently transactions are disputed.

For example, a business processing thousands of low-value transactions might experience a relatively small financial loss from chargebacks but still have a concerning number of disputes.

Another business may have only a few chargebacks, but each one could involve a substantial payment.

These are different risks.

A useful internal measure is the number of chargebacks compared with the number of card transactions.

Illustrative example:

Card transactions during a month: 1,000
Chargebacks recorded during that month: 12
Simple chargeback-to-transaction ratio: 12 ÷ 1,000 × 100 = 1.2%

This is a simplified operational calculation, not an official Visa or Mastercard monitoring calculation. Card networks can use different reporting periods, definitions, exclusions and programme requirements.

It is also not an MCA approval threshold.

A funding provider might assess the financial value of disputes, their cause and the resulting settlement risk alongside transaction counts.

2. Whether chargebacks are increasing or decreasing

The timing and pattern of disputes can matter as much as their cumulative total.

Consider two hypothetical businesses:

Business A experienced several disputes six months ago following a delivery problem. It subsequently corrected its fulfilment process and has received no further chargebacks.

Business B experienced a growing number of disputes during the last several weeks, with multiple unresolved cases and delayed settlements.

Even with similar overall card turnover, Business B may present greater uncertainty because its recent dispute pattern suggests continuing risk.

These are illustrative business profiles, not actual funding decisions or guarantees of eligibility.

3. The reasons customers are disputing payments

Not all dispute reasons indicate the same underlying problem.

A provider reviewing payment-processing records may consider whether disputes arise from:

Unauthorised transactions or suspected card fraud.
Goods not arriving on time.
Services not being delivered as agreed.
Unclear recurring billing arrangements.
Unrecognised payment descriptors.
Products not meeting advertised descriptions.
Delayed refunds or incorrect charges.

Businesses may be better able to explain isolated operational problems when they can demonstrate the issue has been addressed.

Persistent fraud, repeated non-delivery or unresolved billing complaints may raise more serious concerns.

4. Whether disputes have been resolved

The outcome of a chargeback can provide useful context.

A business may be able to show that a dispute was successfully defended using delivery confirmation, customer correspondence, transaction records or other evidence.

However, successfully defending a chargeback does not necessarily remove the original dispute from every payment-network monitoring calculation.

Businesses should distinguish between disputes received, disputes won, disputes lost and disputes still open when preparing an application.

5. Merchant account restrictions and withheld settlements

A payment processor may respond to elevated payment risk by applying restrictions, delaying settlements, establishing reserves or reviewing the merchant account.

Such measures can directly affect funding because a conventional merchant cash advance depends on continuing card transactions and collections.

A business that cannot reliably process or settle card payments may have difficulty supporting a sales-based funding arrangement.

6. Available cash flow after existing commitments

Chargebacks are only one part of the financial assessment.

A provider may also consider existing cash advances, business loans, overdraft commitments, recurring expenses and the cash required to operate the business.

Strong gross revenue does not necessarily mean an advance is affordable.

A sensible assessment must consider how much usable cash remains after refunds, disputed payments, processing costs, financing collections and essential operating expenses.

What UK Merchant Cash Advance Providers Say About Chargebacks

Some UK funding providers publish detailed information about the payment-processing risks they consider. Others describe general eligibility requirements without specifying a chargeback tolerance.

The examples below are based on publicly available provider information reviewed on 1 November 2026. They do not establish that any provider will approve an application involving chargebacks.

Square Cash Advance UK

Square provides one of the clearest published examples of how chargeback activity can influence merchant cash advance eligibility.

According to Square's UK guidance:

A significant number of payment disputes during the previous 12 months may lead to an application being declined.
Payment reserves can negatively affect funding eligibility.
Payment-processing limits can restrict access to funding.
Unusual transaction activity and declining processing volume can affect approval.
Cash advance offers are generated automatically for eligible accounts.

Square also states that its UK Cash Advance programme considers qualifying sole traders and partnerships. Businesses generally need an established Square payment-processing history to be considered.

Importantly, Square does not publish a universal chargeback percentage that guarantees acceptance or triggers rejection of every application.

Source: Square UK — Cash Advance Application Requirements

PayPal Working Capital UK

PayPal Working Capital is another UK cash advance programme that uses payment history to assess eligibility.

Its published minimum requirements include:

A UK-based business.
A PayPal Business account established for at least 90 days.
At least £9,000 in qualifying annual PayPal sales.
An existing PayPal Working Capital advance repaid, unless an early renewal invitation applies.

PayPal explains that eligible sales are calculated net of transaction reversals, with other exclusions also applying.

This makes the distinction between gross sales and qualifying sales particularly important.

For example, a business could process substantial customer payments but have lower eligible revenue after reversals.

PayPal also considers account behaviour, financial position and other eligibility factors.

These published requirements do not mean that PayPal automatically accepts businesses with chargebacks.

Source: PayPal UK — Working Capital

365 Finance UK

365 Finance offers merchant cash advances based on eligible debit and credit card sales.

Its published application guidance identifies minimum requirements including:

At least six months of trading.
Monthly credit and debit card sales exceeding £10,000.
Agreement to an automatic sales-based collection arrangement.

These requirements illustrate the importance of established card revenue.

However, satisfying the stated turnover and trading-history requirements does not establish that a business with chargebacks will qualify. Specific dispute acceptance criteria would need to be confirmed with the provider.

Source: 365 Finance — How Do You Apply?

Liberis Business Cash Advance

Liberis provides sales-based business financing through its Business Cash Advance product and participating distribution arrangements.

Its published funding information describes a fixed funding fee and repayments based on an agreed percentage of sales.

Importantly, Liberis also discloses that its agreements may include a minimum monthly remittance of up to 3% of the receivables purchased, with any shortfall potentially collected by Direct Debit.

This illustrates why businesses experiencing chargebacks should not assume that every cash advance has no minimum collection requirements.

Liberis does not provide a general public promise of approval for merchants with disputed transactions.

Source: Liberis — Explore Funding

The important distinction: These are examples of publicly documented UK funding arrangements, not a ranking of chargeback-friendly providers or a statement that Mehmi Financial Group has commercial relationships with them.

How Chargebacks Affect Merchant Cash Advance Eligibility and Funding Amounts

Chargebacks can influence the financing assessment in two related but separate ways.

First, they can indicate payment-processing risk.

Second, they can reduce the cash a business actually receives from its card sales.

The difference matters because gross card turnover is not always the same as eligible funding revenue or cash available for operations.

A funding provider may review several figures:

Gross card sales: Customer payments recorded before relevant deductions.
Refunds and reversals: Amounts returned or reversed.
Chargeback debits: Amounts deducted in connection with payment disputes.
Processing fees: Card acceptance and settlement charges.
Payment reserves: Amounts temporarily withheld by the processor.
Net settlements: Funds actually released to the business, subject to the processor's accounting and payout arrangements.

Different MCA products calculate collections differently.

For example, Square states that its UK Cash Advance withholding percentage is applied to gross card sales, including VAT and tips, in addition to its processing fees.

PayPal, by contrast, explicitly defines qualifying annual PayPal sales for its Working Capital eligibility test net of transaction reversals.

Businesses should therefore ask which figure is used to establish eligibility, size the advance and calculate ongoing collections.

Illustrative Example: A UK Business With Chargebacks Applying for an MCA

Consider a hypothetical UK retail business processing £30,000 in monthly debit and credit card transactions.

During one month, it experiences customer refunds, chargebacks and a temporary payment reserve.

Illustrative monthly card-processing figures:

Gross card sales: £30,000
Customer refunds: £1,000
Chargeback debits: £800
Card-processing fees: £450
Temporary reserve withholding: £1,000

Assuming these amounts are separate deductions relating to the same reporting period, and there are no other adjustments:

Estimated cash released before MCA collections:

£30,000 − £1,000 − £800 − £450 − £1,000 = £26,750

Although the business processed £30,000 in card payments, only £26,750 is available from those transactions during the illustrated period.

The £1,000 reserve is assumed to be temporarily withheld rather than permanently lost. Its eventual release would depend on the processor's terms.

What happens if the business takes an MCA?

Assume the business receives the following purely illustrative financing arrangement:

Upfront funding: £12,000
Contractual total to remit: £15,000
Fixed funding cost: £3,000
Illustrative collection percentage: 10% of gross card sales

The £3,000 funding cost equals 25% of the upfront amount. This is not an annual interest rate or APR, and the figures are not a quote from a real provider.

If the agreement applies collections to gross monthly card sales of £30,000:

£30,000 × 10% = £3,000 collected towards the MCA

Under the same simplified monthly assumptions:

£26,750 − £3,000 = £23,750 remaining cash

That is the amount remaining from the illustrated card settlements before rent, wages, supplier payments, tax and other expenses.

If gross eligible sales fell to £20,000 and the same percentage applied, the collection would be £2,000 for that month, before considering any contractual minimums or other obligations.

Why this calculation matters

An MCA can offer collections that vary with sales, but chargebacks may reduce available cash at the same time.

The business could face three simultaneous pressures:

Less cash because disputed payments have been reversed.
Additional withholding because its payment processor has established a reserve.
Ongoing MCA collections under its financing agreement.

If operating margins are already tight, these deductions could make the funding unsuitable.

The actual calculation depends on the provider's definition of eligible sales, the timing of reversals, fees, reserves and minimum payment obligations.

A business should model its worst reasonable month, not only its average month, before accepting an advance.

Can You Get an MCA With a High Chargeback Rate?

Possibly, but elevated chargeback activity is a material warning sign.

There is no single publicly established UK MCA chargeback threshold that applies to every provider.

It is particularly important not to confuse payment-card network monitoring rules with merchant cash advance underwriting criteria.

Visa, Mastercard and payment acquirers operate monitoring arrangements for problematic payment activity. These arrangements can use different calculations, reporting periods and volume requirements.

An MCA provider may apply a separate, more restrictive risk policy even if a merchant has not reached a card-scheme monitoring threshold.

Businesses should therefore avoid assuming that being below a particular dispute percentage makes them eligible for funding.

When a chargeback history may be less concerning

A business may have a more credible application where:

Disputes were isolated rather than recurring.
Most historical issues are now resolved.
Card-processing activity has remained consistent.
The business can explain the reasons for disputed transactions.
Documented corrective action has reduced recurring problems.
There are no material unresolved processor restrictions.
The requested advance is affordable after existing commitments.

These factors may provide a more complete picture of trading performance, but they do not guarantee approval.

When approval may be particularly difficult

A merchant cash advance may be harder to obtain where:

Chargeback activity is rising rapidly.
Numerous disputes remain unresolved.
A payment processor has suspended transactions or materially restricted settlements.
Significant funds are being withheld through reserves.
Recent card revenue has declined.
Existing MCA collections already consume substantial cash flow.
The business is struggling to meet ordinary operating expenses.

An applicant in this position may benefit more from resolving payment-processing issues and reviewing its finances before seeking additional funding.

What Documents Should You Prepare When Applying With Chargebacks?

A business with chargebacks should be prepared to provide a clear, accurate explanation of its card-processing history.

The exact documentation depends on the provider. Some payment-platform programmes rely heavily on existing account data, while other funders may request additional records.

A useful application package may include the following.

1. Recent merchant processing statements

Statements should show card turnover and the relevant settlement activity.

Where available, include transaction counts, refunds, chargebacks and payment adjustments.

2. Business bank statements

Bank statements can help demonstrate deposited revenue, ordinary operating expenses, returned payments and existing financing collections.

3. Chargeback history report

Prepare a breakdown showing:

The date each dispute was opened.
The original transaction amount.
The chargeback reason.
Whether the dispute remains open.
Whether the business accepted, won or lost the dispute.
Any resulting debit or reversal.

This makes it easier to distinguish historical problems from current exposure.

4. Evidence supporting disputed transactions

Relevant evidence may include sales receipts, invoices, delivery confirmations, service agreements, refund records and customer communications.

Do not assume that supplying evidence will reverse a chargeback. The outcome is determined through the applicable scheme process.

5. Explanation of corrective actions

If the business experienced repeated disputes, explain the operational changes made.

For example, an online retailer might document improvements to delivery tracking, customer support procedures or recurring-payment communications.

6. Details of existing finance

Disclose outstanding merchant cash advances, business loans, overdrafts and other material commitments when requested.

Incomplete or misleading financial information may cause an application to fail and can create contractual difficulties.

For more information on general application requirements, read Merchant Cash Advance Documents UK.

How to Improve Your Position Before Applying for an MCA

Businesses cannot erase a genuine chargeback history simply by submitting a new application.

However, addressing the underlying causes of disputes may improve payment-processing stability and provide a stronger basis for a future funding assessment.

Step 1: Identify the cause of each chargeback

Start by separating disputes into meaningful categories.

For example:

Fraud or unauthorised payments.
Unrecognised transactions.
Delivery and fulfilment issues.
Product or service complaints.
Subscription cancellations.
Refund-processing problems.
Duplicate or incorrect charges.

Look for recurring patterns rather than treating every dispute as an isolated event.

Step 2: Improve payment descriptions and customer communication

Customers sometimes dispute payments because they do not recognise the name appearing on their bank statement.

Ensure your payment descriptor, customer receipts and contact information clearly identify the business.

Communicate delivery delays, subscription renewals and cancellation conditions transparently.

Square's UK payment dispute prevention guidance recommends clear business details, accessible contact information, accurate descriptions and appropriate transaction records.

Step 3: Resolve legitimate customer problems promptly

Where a customer is entitled to a refund, handle it in accordance with applicable consumer law, card-scheme requirements and the business's lawful terms.

A timely resolution may prevent some complaints from escalating into formal disputes.

Do not pressure customers to waive their right to dispute transactions or discourage legitimate refund requests.

Step 4: Strengthen fraud-prevention procedures

For online transactions, appropriate safeguards can include:

Strong Customer Authentication and 3-D Secure where applicable.
Payment-provider fraud screening.
Transaction monitoring for unusual activity.
Suitable customer verification processes.
Clear authorisation for recurring payments.
Review of suspicious high-value transactions.

These measures can reduce certain payment risks but cannot eliminate chargebacks.

Step 5: Keep reliable dispute records

Maintain the evidence needed to respond promptly to payment disputes.

For businesses selling physical goods, this may include proof of dispatch and delivery.

For service providers, it may include booking records, signed agreements, evidence of service delivery and customer correspondence.

Respond within the deadline communicated by the acquiring bank or payment processor.

Visa's merchant dispute-resolution guidance emphasises accurate transaction records and prompt responses.

Step 6: Review your processor restrictions

If your merchant account has a reserve or settlement restriction, contact the payment provider to understand:

Why the measure was imposed.
Which conditions apply.
Whether additional documentation is required.
When withheld funds may become available.
What actions might help resolve the concern.

Do not assume that changing payment processors will remove an existing obligation or eliminate the relevant payment history.

Step 7: Calculate affordability using realistic cash flow

Before applying, calculate how much cash the business needs for ongoing operations.

Include essential costs, tax liabilities, existing financing commitments and a reasonable allowance for additional refunds or disputes.

If an MCA would leave insufficient funds to operate normally, borrowing may worsen the underlying problem.

Should You Apply for an MCA While Chargebacks Are Still Open?

Open chargebacks do not necessarily mean every provider will automatically decline an application.

However, unresolved disputes create uncertainty about how much revenue may ultimately be retained.

A provider may consider:

The total value of open disputes.
Whether the amounts have already been debited or reserved.
The likelihood of further disputes arising.
The potential impact on future settlements.
Whether the business can continue operating if disputed amounts are lost.

It may be sensible to address significant disputes before applying, particularly where the business is relying on the disputed proceeds to pay essential expenses.

If funding is urgently needed, provide an accurate picture of the open cases and ask how the provider treats the associated payment exposure.

Avoid describing disputed or withheld funds as unrestricted available cash.

Can You Get an MCA if Your Payment Processor Has Frozen Your Account?

A frozen or suspended merchant account can be a more serious obstacle than a small number of historical chargebacks.

Traditional merchant cash advances depend on card-processing activity and the ability to collect an agreed share of future sales.

If the processor has suspended transactions, delayed settlements indefinitely or terminated services, the usual funding arrangement may no longer be workable.

The practical first step is to establish why the account has been restricted and what the processor requires to resolve the issue.

Seek written clarification about pending chargebacks, reserves, settlement rights and outstanding obligations.

An alternative commercial finance product may be worth investigating, but it should not be used to conceal payment-processing problems or take on unaffordable debt.

Do Chargebacks Affect How Much Merchant Cash Advance Funding You Can Receive?

They can.

MCA funding amounts generally depend on the provider's assessment of future eligible revenue and the business's ability to support the funding arrangement.

Chargebacks may influence an assessment in several ways.

Reduced eligible revenue: Transaction reversals may lower the sales figure used by certain providers.

Higher payment risk: Repeated disputes may make future collections less predictable.

Lower available cash: Refunds and withheld settlements may reduce the amount the business can comfortably allocate to financing.

Processor restrictions: Payment limits or reserves may affect the collection arrangement.

Existing financial pressure: Chargebacks alongside substantial existing borrowing may increase overall risk.

A provider may decline an application or propose different terms or a smaller advance, depending on its underwriting policy.

However, there is no reliable universal formula for calculating how much funding a particular number of chargebacks will reduce.

For a broader explanation, see Merchant Cash Advance Eligibility UK.

Are Merchant Cash Advances Expensive for Businesses With Chargebacks?

Merchant cash advances can be relatively expensive forms of short-term commercial finance, regardless of chargeback history.

The British Business Bank identifies MCAs as a potentially expensive way to obtain funding and encourages businesses to consider appropriate alternatives.

Businesses with payment disputes should pay particular attention to the total financing cost and how collections interact with their existing settlement deductions.

Before accepting an offer, obtain written answers to these questions:

How much money will the business receive upfront?
What is the total amount it must remit?
What is the fixed fee or other financing cost?
Which transactions are included in the collection calculation?
Are collections based on gross or net sales?
What happens when transactions are refunded or charged back?
Does the agreement impose minimum monthly or periodic payments?
What happens if the card processor places a hold on settlements?
Are there personal guarantees or other personal obligations?
Are there additional charges, default provisions or consequences if the business closes or changes its payment processor?

A fixed funding fee does not automatically mean financing is inexpensive.

The effective annualised cost depends on the amount received, the timing of collections and the complete contractual terms. Businesses should compare equivalent cash flows rather than relying only on an advertised factor rate or fixed fee.

An MCA may also provide limited savings from early repayment where the contractual funding cost remains unchanged.

For additional guidance, read How to Choose a Merchant Cash Advance Provider UK.

Are Merchant Cash Advances Regulated in the UK?

The regulatory position depends on the particular financing product, its legal structure and the activities being carried out.

Many commercial merchant cash advances are structured as purchases of future business receivables rather than conventional loans.

For example, Square explicitly states that its UK Cash Advance product is not regulated by the Financial Conduct Authority.

Liberis similarly states that its Business Cash Advance is a form of receivables finance rather than a loan and that the product is not FCA-regulated.

However, it would be incorrect to assume that every product marketed as a merchant cash advance has identical legal or regulatory treatment.

UK consumer-credit rules can also be relevant to business borrowing involving sole traders, certain partnerships and unincorporated associations, depending on the agreement and applicable exemptions.

GOV.UK explains these distinctions in its guidance on offering credit to consumers and businesses.

Before signing an agreement:

Identify the actual financing company.
Establish whether the proposed activity and agreement are regulated.
Read the full financing and collection terms.
Check any relevant authorisation using the FCA Firm Checker.
Understand whether Financial Ombudsman Service protection applies to the particular activity.
Obtain independent professional advice where there is uncertainty about legal obligations or personal liability.

A company's authorisation for payment services does not necessarily mean its separate merchant cash advance product is FCA-regulated.

Are chargebacks themselves protected by UK law?

Chargeback rights and MCA regulatory status are separate matters.

The chargeback system is primarily governed by card-scheme rules rather than being a standalone statutory right to a refund.

Certain qualifying consumer credit-card purchases may also attract protection under Section 75 of the Consumer Credit Act 1974, but that is a separate legal framework.

The Financial Ombudsman Service also considers eligible complaints involving disputed transactions and merchant acquiring arrangements, subject to its jurisdiction and the relevant contract.

Its guidance on disputed transactions explains how the terms of a merchant services agreement can determine whether an acquirer is entitled to debit funds following a chargeback.

Alternatives to a Merchant Cash Advance if Your Business Has Chargebacks

A merchant cash advance is not always the most suitable financing option for businesses experiencing payment disputes.

The appropriate alternative depends on the reason funding is needed, the financial condition of the business and the source of its revenue.

Short-term business loan

A short-term commercial loan may provide a defined repayment schedule over an agreed period.

Unlike a sales-based MCA, instalments may remain payable even when card transactions decline.

That predictability can help budgeting, but it can also place pressure on businesses with fluctuating revenue.

Business overdraft or line of credit

An overdraft or revolving business credit facility may help finance temporary working capital requirements.

Eligibility, cost, security requirements and repayment conditions vary by provider.

These products may be unsuitable where the business is already experiencing persistent losses or cannot demonstrate repayment capacity.

Invoice finance

Businesses issuing qualifying invoices to other businesses may be able to investigate invoice financing or factoring.

These products focus on eligible receivables rather than future card sales, although providers still consider customer credit quality, disputed invoices and other risks.

Invoice finance does not automatically resolve problems involving disputed customer payments.

Supplier payment arrangements

Negotiating revised payment dates with suppliers may help address a temporary cash-flow mismatch without creating an additional financing obligation.

Whether this is possible depends on existing supplier agreements and commercial circumstances.

Resolve the underlying chargeback problem first

If the main cash-flow problem arises from ongoing fraud, repeated refunds, poor fulfilment or payment-processing restrictions, additional financing may provide only temporary relief.

Addressing the operational issue can be more valuable than borrowing against uncertain future revenue.

If your business is already struggling with debts, Business Debtline offers free, independent support to eligible self-employed people and small business owners in England and Wales.

Frequently Asked Questions About Merchant Cash Advances With Chargebacks UK

Can I get a merchant cash advance with previous chargebacks?

Potentially, yes. Previous chargebacks do not automatically disqualify every business. Eligibility depends on the provider's policies, the severity and timing of the disputes, card revenue, merchant account status and other underwriting information.

How many chargebacks are too many for an MCA?

There is no universal UK merchant cash advance chargeback limit. Payment schemes, merchant acquirers and funding providers may assess dispute activity using different criteria. A provider may reject an application based on risk even where the business has not breached a card-network monitoring threshold.

Can I qualify if I won my chargeback disputes?

Possibly. Successful dispute outcomes may help explain the business's payment history, but providers may still consider how frequently disputes occurred and whether there is ongoing processing risk. Winning a chargeback is not a guarantee of funding eligibility.

Will refunds affect merchant cash advance approval?

Refunds can affect eligibility because they may reduce net revenue and available settlements. Providers may also review unusually high refund activity as part of the business's overall payment-processing performance.

Does Square approve cash advances when a business has chargebacks?

Square does not guarantee approval. Its UK guidance states that significant payment disputes over the previous 12 months may result in a cash advance application being declined. Square also considers payment reserves, restrictions and transaction history.

Can I get a merchant cash advance with bad credit and chargebacks?

It may be possible to obtain commercial funding with adverse credit, but combining credit difficulties with significant chargeback activity can increase underwriting concerns. Eligibility depends on the product, the applicant's overall financial position and the provider's requirements.

Can online businesses qualify with chargebacks?

Online businesses may qualify for merchant cash advances where they meet the funding provider's payment-processing and other requirements.

However, online merchants with frequent card-not-present disputes, high refunds or significant payment reserves may face additional scrutiny.

Read MCA With Online Card Payments for more information.

Should I change payment processors before applying?

Changing processors should not be used to hide disputes or evade contractual obligations.

Some MCA products require an existing relationship with a specific payment platform. Others may work with supported external processors.

Before making changes, review your merchant services agreement, outstanding payment disputes and any existing financing terms.

Can chargebacks cause an existing MCA to default?

Chargebacks do not necessarily trigger a default by themselves.

However, severe payment-processing problems, disrupted collections, missed contractual minimums or breaches of other funding terms could create contractual consequences.

The outcome depends on the actual agreement.

If you already have an MCA and your processor has restricted settlements, contact the funding provider promptly to discuss the situation.

How to Explore Merchant Cash Advance Funding With Chargebacks in the UK

If your business has chargebacks and needs working capital, begin by reviewing its actual card-processing performance and financing requirements.

A useful first assessment should establish:

Whether the business is actively trading and receiving card payments.
How much eligible card revenue it generates.
How many chargebacks are outstanding.
Whether payment reserves or settlement restrictions apply.
How much financing is required and what it will be used for.
Whether future cash flow can support the proposed collections.

Mehmi Financial Group is a Canada-based commercial financing brokerage, not a bank or direct merchant cash advance lender.

We help eligible businesses explore potential commercial financing opportunities through independent third-party providers, subject to jurisdiction, product availability and applicable legal requirements.

For UK businesses, any introduction or referral depends on an appropriate and permitted provider arrangement being available.

There is no guarantee that a business with chargebacks will qualify for an MCA or another financing product.

Request a Review of Your Business Financing Options

You can also contact Mehmi Financial Group to discuss your business financing requirements.

Mehmi Financial Group may receive commissions or referral fees in connection with eligible financing transactions. The amount, cost, timing and availability of funding are subject to the applicable provider's assessment and final contractual terms.

Final Thoughts: Can a UK Business Get an MCA Despite Chargebacks?

A UK business may still qualify for a merchant cash advance despite having chargebacks, but the outcome depends on the complete payment-processing and financial picture.

The most important distinction is between an otherwise stable business with occasional resolved disputes and a business experiencing persistent reversals, restricted settlements or serious cash-flow difficulties.

Before applying, businesses should understand the reasons for their chargebacks, calculate actual available card revenue and review the full financing cost.

A merchant cash advance can provide useful working capital for a suitable business, but it should not be treated as a guaranteed solution to customer disputes or payment-processing problems.

The strongest approach is to resolve preventable chargebacks, provide accurate financial information, compare the written terms of available funding products and borrow only where the business can reasonably support the resulting commitments.

This article provides general information about UK commercial financing and payment disputes. It is not legal, tax or financial advice, or an offer or guarantee of funding. Product eligibility, contractual terms, regulatory status and funding availability must be verified for each individual application.