Merchant Cash Advance

Fast, Easy Financing for Working Capital Business Loans

Merchant Cash Advance (MCA)

Overview

A merchant cash advance, also called an MCA, provides alternative financing to a traditional small-business loan. With an MCA, you receive an upfront sum of cash that you repay over a set period of time.

Merchant cash advances are best suited for small businesses that need capital immediately to cover cash-flow shortages or short-term expenses.

For more information on MCAs, check out our FREE Small Business Financing Guide.

Basic Qualifications

  • 500+ FICO Score

  • 6 Months in Business

  • $10,000 per month in revenue

Features

  • Fast funding within 24-48 hours

  • Terms from 3 to 36 months

  • Daily, weekly, and monthly options[1]

    [1] Depending on qualification of financial profile.

Merchant Cash Advance (MCA) FAQ

  • A Merchant Cash Advance (MCA) is a financing option where a business receives a lump sum of cash in exchange for a percentage of its future revenue. It's often used by small businesses that need quick access to capital.

  • With a Merchant Cash Advance, the lender provides the business with a cash advance, which is then repaid through a daily, weekly or monthly deduction of a fixed amount. The total amount to be repaid includes the advance plus a factor rate, which determines the cost of the financing.

  • The terms of an MCA can vary, but they typically involve a factor rate ranging from 1.1 to 1.5, which determines the total repayment amount. Repayment terms are generally fixed, unless the advance is repaid through a percentage of daily credit card sales, which can fluctuate.

  • The advantages include quick access to capital, no requirement for collateral, and flexible repayment terms based on sales volume (if you have a high number of deposits). MCAs can be a good option for businesses with limited access to traditional loans.

  • Disadvantages include higher costs compared to traditional loans, the potential for daily repayments to strain cash flow, and the lack of regulation, which can lead to less favorable terms for the borrower.

  • Qualification criteria for an MCA typically include a minimum monthly revenue threshold, a certain period of business operation (usually at least 6 months), and a minimum credit score (500+). The specific requirements can vary between lenders.

  • Technically no, a Merchant Cash Advance is not considered a loan. It's a form of business financing where the business sells a portion of its future sales in exchange for immediate capital.

  • One of the main advantages of an MCA is the speed of funding. Businesses can often receive the advance within a couple of days (sometimes hours) of approval, making it a fast solution for immediate capital needs.

  • A Merchant Cash Advance should be used for short-term financing needs, such as inventory purchases, emergency repairs, or cash flow gaps. It's not recommended for long-term investments due to its higher costs.

  • Alternatives include business lines of credit, term loans, SBA loans, and equipment financing. Each option has its own advantages and disadvantages, so it's important to compare them based on the business's specific needs and financial situation. For more information, check out our FREE Small Business Financing Guide