Merchant Cash Advance in South Africa: How It Works (Plus iK Cash Advance)

A merchant cash advance is a type of business funding that’s built for real trading, not perfect paperwork. If you take card payments and you have months where cash flow is tight, but sales are steady, this model can be a practical way to access working capital without locking yourself into fixed repayments.

It works differently to a traditional loan. You receive an upfront amount, then repay it through a small percentage of your card sales over time. When business is busy, you repay faster. When it’s quiet, repayments slow down too. That flexibility is what makes a merchant cash advance worth understanding, especially for South African businesses where trading can change quickly from one week to the next.

In this guide, we’ll break down what a merchant cash advance is, how repayment works, when it fits, when it doesn’t, and how iK Cash Advance works for iKhokha merchants.

What is a merchant cash advance?

A merchant cash advance is funding based on your future card sales.

Instead of borrowing money and paying it back in fixed monthly instalments, you receive an amount upfront and repay it as you trade. Repayment is taken automatically as a percentage of your card turnover, which means it moves with your sales.

This model is usually best suited to businesses that:

• Take card payments consistently
• Have regular foot traffic or repeat customers
• Need working capital for stock, equipment, or cash flow gaps
• Prefer repayments that adjust with trading patterns

It’s not “free money” and it’s not a rescue plan for a business that’s losing money every month. It’s a tool that works best when the money you take helps you make more money, like buying stock that sells quickly, or fixing equipment that’s slowing you down.

How repayment works (and why it feels different to a loan)

With a merchant cash advance, you don’t repay a fixed amount every month. Repayment happens as a set percentage of your card sales.

So instead of stressing about “Will I have enough on the 1st?”, repayment is tied to how you trade:

• If you have a strong week, you repay more
• If you have a quiet week, you repay less
• If sales drop, repayments slow down automatically

That can help with cash flow, because it reduces pressure in slower periods.

It also means you need to be honest about seasonality. If your business has big peaks and big dips, you’ll want to plan for how funding will affect your day-to-day cash flow in the quieter months.

A simple way to sense-check it is this: If you take the funding, will it help you increase sales or protect sales? If yes, a cash advance can make sense. If not, it can become an extra strain.

What a merchant cash advance is good for

The best use cases are the ones where funding has a clear job and a clear return.

Stock for busy periods

If you run a spaza, salon, takeaway, clothing business, or market stall, stock is often the biggest lever. Funding can help you buy fast-moving items before a busy weekend, month-end, or seasonal rush.

Equipment that helps you trade faster

Broken or outdated equipment costs you money quietly. An oven that takes too long to heat, a fridge that doesn’t keep things cold, a tool that slows down your work, all of it limits what you can sell in a day.

Funding can help you repair or upgrade equipment so you can serve more customers and work with less stress.

Bridging short cash flow gaps

Many businesses don’t struggle because they don’t sell. They struggle because money comes in later than expenses go out.

Examples:

• You pay suppliers upfront, but customers pay later
• You have rent and wages due, but weekend sales haven’t landed yet
• You’re waiting on a larger payment, but you need stock now

A merchant cash advance can help you bridge that gap without needing to renegotiate everything.

Seasonal demand and “once-off” opportunities

Sometimes you get an opportunity that’s time-sensitive, a bulk deal, a big order, a seasonal spike. Funding can help you act while it still makes sense.

iK Cash Advance: how it works for iKhokha merchants

iK Cash Advance is iKhokha’s merchant cash advance offering for eligible merchants. If you qualify, you’ll see a personalised offer in the iKhokha App, based on your iKhokha card sales history. Repayment happens through a small percentage deducted from future card sales, so you repay while you’re trading.

If you see an offer, it’s still worth doing your own quick check: what the money will be used for, how quickly that spend can pay itself back, and whether it improves profit, speed, or stability. Used well, it can give you breathing room. Used carelessly, it can tighten cash flow.

Who usually qualifies for iK Cash Advance

iKhokha lists two core requirements to qualify: you must be an active iKhokha merchant for at least 6 consecutive months, and you must make more than R2 500 in sales per month. Offers are based on how much you’ve traded with iKhokha, because a merchant cash advance is built around card turnover rather than a traditional loan-style assessment.

When a merchant cash advance might NOT be the right fit

A merchant cash advance can be helpful, but it isn’t designed for every situation. The safest funding decisions usually happen when business owners understand when to pause, not only when to apply.

It may not be the best option if your business is already struggling to cover daily costs without a clear plan to increase income. Funding works best when it helps your business trade better, not when it is used to delay bigger operational problems.

It can also be risky if sales are very unpredictable or declining long term. Because repayment is linked to card turnover, slower sales mean funding takes longer to repay. That isn’t always a problem, but it can become stressful if the funding didn’t improve trading performance.

Another situation where caution helps is using funding for expenses that do not help you earn more. For example, using growth capital for general lifestyle costs or unrelated business spending often creates pressure later.

Funding tends to work best when it helps you:

• Sell more
• Work faster
• Reduce operating problems
• Handle predictable busy periods
• Improve customer service or reliability

If the funding doesn’t support at least one of these, it’s worth stepping back and reviewing your plan first.

A simple checklist before accepting a cash advance

Before accepting any funding offer, a quick self-check can help you make a confident decision.

Ask yourself:

What will this money do for the business?

Be specific. Buying stock, repairing equipment, improving cash flow, or preparing for a busy season are strong reasons. Vague plans often lead to funding stress later.

Will this help me earn more or protect current income?

Funding should support growth or stability. If it doesn’t improve how your business earns, repayment may feel heavier than expected.

Do I understand how repayments adjust?

Merchant cash advance repayments move with card sales. That flexibility helps during slower periods, but it’s still important to understand how it affects your daily cash flow.

Have I checked my quieter months?

Looking at slower trading periods helps you understand how funding will behave across your full business cycle, not just during peak sales.

Taking ten minutes to answer these questions often prevents funding regret later.

Who usually qualifies for iK Cash Advance

iKhokha lists two core requirements to qualify: you must be an active iKhokha merchant for at least 6 consecutive months, and you must make more than R2 500 in sales per month.

Offers are based on how much you’ve traded with iKhokha, because a merchant cash advance is built around card turnover rather than a traditional loan-style assessment.

How to check if you have an iK Cash Advance offer

Open the iKhokha App and tap “iK Cash” to see your Cash Advance status and any available offer.

If you have an offer, you can review the amount and repayment structure in-app, then accept only if it fits what you need the money to do.

How merchant funding fits into your bigger funding strategy

Merchant funding is usually one piece of a bigger funding picture. Many businesses use different types of funding at different stages of growth.

For example:

• Early-stage businesses sometimes rely on community funding, stokvel support, or supplier credit
• Growing businesses often use equipment finance or merchant funding
• Established businesses may combine bank loans, expansion funding, or development finance

If you want to compare merchant cash advances with other funding routes available to South African businesses, you can explore our full guide to small business funding in South Africa, which breaks down different funding options and when they usually work best.

Final thoughts: funding that moves with your business

A merchant cash advance is built around how small businesses actually trade. Instead of rigid repayment dates and heavy admin, it moves with your daily sales and gives you access to working capital when timing matters.

Like any funding, it works best when it is used with intention. Business owners who plan how funding improves trading usually benefit the most. Funding used without a clear purpose often creates pressure instead of relief.

If you already trade with iKhokha, your transaction history is helping build your access to future funding options. When the right opportunity comes along, you may already have a funding offer waiting for you.