Understanding your options, choosing the right fit, and working with trusted providers
For SMEs, access to finance can be the difference between standing still and scaling up. But not all funding is created equal and not all finance providers operate with your best interests at heart. Whether you need capital to manage cash flow, invest in growth or navigate seasonal shifts, choosing the right SME finance product is essential.
In this quick guide, we’ll break down common SME finance options, help you understand what to look out for and explain why partnering with a SASFA Member gives you confidence from day one:
1. Merchant Cash Advance (MCA)
How it works:
An MCA is a lump sum of capital advanced to a business, repaid as a percentage of future debit or credit card sales. It’s not a loan, it’s the sale of future receivables at a discount.
Ideal for:
Retailers or hospitality businesses with consistent card sales.
What to consider:
- No fixed repayment terms, so repayments align with sales volume.
- Quick access to funds.
- Not suited for businesses with irregular or low card turnover.
Watch out for: Higher total costs if daily sales are slow and always review the agreed percentage and total repayment amount.
2. Working Capital / Unsecured Business Loans
How it works:
A traditional loan model where you receive a fixed sum and repay it over a set period. No collateral is required, making it more accessible.
Ideal for:
SMEs needing cash for operational costs, stock purchases or business expansion.
What to consider:
- Regular repayment terms (weekly or monthly).
- Higher approval chances than bank loans.
- Interest and fees should be clearly explained.
Watch out for: Vague repayment terms or penalty clauses. Always ensure the lender provides a clear repayment schedule.
3. Invoice Discounting
How it works:
You receive an advance on unpaid customer invoices, giving you quick access to cash without waiting for the payment cycle to end.
Ideal for:
B2B businesses with large invoice books and long payment terms.
What to consider:
- You retain control of your collections.
- Fast access to liquidity.
- Repayment is made when the customer pays their invoice.
Watch out for: High fees or hidden service charges. Understand the percentage advanced and the cost of the service.
4. Asset Finance
How it works:
Allows you to acquire machinery, vehicles or equipment by spreading the cost over time through installments.
Ideal for:
Businesses needing to invest in high-value assets without tying up working capital.
What to consider:
- May include balloon payments or residual values.
- The asset may serve as collateral.
- Some providers offer tax benefits.
Watch out for: Ownership terms. Ensure you understand whether the asset is leased, rented or purchased.
How to Choose the Right Product for Your Business
When evaluating finance options, consider:
- Your cash flow patterns: Choose a product with repayment terms that match your income cycle.
- Your growth plans: Make sure the funding will help your business move forward, not weigh it down.
- Your financial position: Understand your affordability before committing.
Always ask questions, compare products and read the fine print.
Why Choose a SASFA Member?
Partnering with a SASFA Member means choosing transparency, fairness and responsible lending. All members adhere to SASFA’s Code of Conduct, which protects SMEs from:
- Hidden fees
- Predatory lending
- Unclear repayment structures
- Over-indebtedness
Instead, SASFA Members offer funding solutions that are clearly explained, responsibly structured, and tailored to your business’s needs.
No matter your size or industry, the right finance product can help you take your business to the next level. By understanding how each option works and choosing a transparent, ethical provider, you can access the funding you need, without the risks that hold so many SMEs back.
