Cash flow can be a real issue for new and growing businesses. Trying to balance expansion with having enough to operate has left many a small business owner scratching their head. However, in recent years, it’s been easier to secure various forms of business finance. One provider of such finance is Capify. We take a look at everything you need to know about their Merchant Cash Advance and Business Loan services.
Quick look – pros & cons
- A wide range of loan options, ranging from £3,500 to £500,000 over six to 12 months.
- Unsecured loans available, meaning you don’t have to put up assets as collateral.
- Merchant Cash Advance gives an extra option for SMEs.
- Good customer service.
- High typical APR can mean loans end up costing a lot.
- Only businesses that have been trading for twelve months can apply for loans. For cash advance, they require six months.
- You need to have a turnover of at least £7,000 per month to apply for loans. For a cash advance, you need to clear £3,500 monthly.
Overall, there’s a lot to like about Capify. If you need a short-term solution to boost your finances and you meet the criteria, it’s a service worth looking into. However, be aware of the high fees for borrowing.
What is Capify?
Alternative funding provider Capify launched its service back in 2008. At the time, United Kapitol and Capiota merged to create the company. They were amongst the first UK companies to offer SMEs Merchant Cash Advance services in the midst of the financial crisis. Since then, they’ve grown to employ more than 70 people.
Capify aims to provide business owners with the chance to fulfil their goals. They lend money to companies, whether it’s for marketing, buying more stock, or investing in new equipment. Over the last decade, they’ve worked to help thousands of companies reach their potential.
How does Capify work?
There are two main services that Capify offer: Merchant Cash Advances and Business Loans. You can apply for both of these online using the Capify website. There are a few pieces of information you’ll have to provide initially, including you’re your name, contact number, and email address. We take a look at how each service works:
Initially, you can check your eligibility using Capify’s online tool. Here, you’ll have to enter:
- How much you want to borrow
- How quickly you need the funds
- What you’ll use the loan for
- Your company’s legal status
- How long you’ve been trading
- Your estimated annual turnover
- The percentage of that turnover that is from credit/debit card transactions
- Your company details
From here, Capify will provide you with information on whether you’re eligible. This process doesn’t affect your credit score, which is really useful.
You can technically borrow up to 75% of your average monthly turnover. However, there are some stipulations:
- Applicants can borrow between £5,000 to ‘over £150,000.’
- You can pay it back through small regular repayments over 6 to 12 months, depending on your turnover.
- You must run a UK-based business as a limited company.
- Your company has to process more than £10,000 a month.
- You need to provide at least 12 months’ of trading records.
Merchant Cash Advance
These provide an advance of funds based on your future debit and credit card sales. Those who run restaurants, bars, pubs, or similar may find this type of borrowing useful. To apply, you first need to go through the eligibility tool.
If you’re eligible, there are a few rules:
- You can borrow upwards of £3,500.
- Repayment is based on your daily cash flow.
- You must run either a limited company, a partnership, or operate as a sole trader.
- Your company has to turn over at least £3,500 per month.
- You need to provide at least 6 months’ of trading records.
What features does Capify have?
Capify offers a few features that really makes their service stand out. One of the biggest draws is the flexibility of their borrowing and repayment options. Regardless of whether you’re a sole trader, partnership, or limited company, you can borrow upwards of £3,500 for six to twelve months.
In addition to their core features, you’ll also get:
- A dedicated account manager. This personal touch will help guide you through the application process and help with all of your queries.
- UK-based support. There is a dedicated support line in the UK that operates six days a week. No matter what your question is, they’ll help. That’s why they have 4.7 out of 5 on Trustpilot.
- Daily repayments. If you take advantage of the Merchant Cash Advance, you can make small, daily repayments. This can scale based on how much you earn that day.
- Unsecured loans. Capify requires you to have a certain level of monthly income. Because of this, you qualify for an unsecured loan. This is a rarity for most SME funding providers.
- Top-up loans. Another way that Capify stands out from the crowd is that they offer top-up loans. So, if you need extra funding, you can increase your initial loan without having to reapply.
What are the fees for using Capify?
Now we come to one of the major downsides of Capify’s service. The fees. The average effective APT for a loan of up to £25,000 is 67.89%.
Capify provides a good example of how this works out on their website:
- You request a loan of £24,000
- There’s a processing fee of £295.
- An Origination fee of 3% applies.
- You receive £22,895.
- You have to repay £29,472.
- The loan costs you £6,487.
As you can see, this works out to be incredibly expensive. However, as Capify note, many small businesses are rejected by major banks each year.
Who is Capify for?
On the surface, Capify claims to aim their service to small and medium-sized businesses. However, in reality, this isn’t the case. The fairly stringent set of criteria you have to meet rules out many smaller enterprises. Similarly, new startups don’t qualify. You have to have been trading for 12 months (6 for a Merchant Cash Advance) and turnover at least £7,000 each month (or £3,500).
If you own an established business, you’re looking to expand, and you don’t qualify for a standard bank loan, this service is for you. The high APR means that other sources of credit are cheaper if you can access them. However, if not, then Capify presents a good option.
What are the drawbacks of using Capify?
Although Capify’s service has many plus points, there are a few drawbacks. The main downside of Capify’s service is the high fees. The 67.89% APR means that it can cost you thousands to borrow a substantial amount.
Similarly, the high entry requirements mean that smaller companies won’t be able to apply. A £7,000 monthly turnover for business loans and £3,500 for merchant cash advances is a little steep.
Although the customer service reviews for Capify are generally very high, there are some negative comments. There have been instances of lengthy application processes, missed payments, and spam emails.
How safe is Capify?
Capify takes its customers’ security seriously. They use an award-winning platform to store and retrieve your data, and their website is fully encrypted.
The company is fully registered, and Capify is a trademark licensed to United Kapital Limited. You can safely use their service without issue. As the largely positive customer reviews attest, they provide a high level of customer service.
There is quite a lot that we like about Capify. Alternative forms of business finance can save companies the hassle of having to go through traditional banks. And, on the whole, Capify has a flexible service that could potentially benefit a lot of different organisations.
There are some problems with the service. The main downside is the high fees. Not only does the APR work out very pricey, but there are also fees for arranging and applying, meaning you’ll end up repaying a lot.
If you’re a business with a high enough turnover and you’ve been trading for over a year, there’s something here for you. If not, you’ll have to look elsewhere for your business finance.