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Merchant Cash Advance

Loan Amount


Loan Term

Up to 2 Years

Time to Funds

Interest Rate

As low as 18%

What is a Merchant Cash Advance (MCA) and How Does it Actually Work?

In your search for different business financing options, you may have heard about a product called a merchant cash advance. A merchant cash advance isn’t a loan, but a lump sum payment from a provider that you’ll have to repay over time with a percentage of your sales. If sales numbers are strong, repaying a merchant cash advance could only take a few months with an interest rate of around 20%. If sales falter and the repayment period drags on, your interest rate could get pushed into three-digit territory. That’s an expensive proposition for a business already experiencing a slowdown, and it should make you think twice before signing any documents.

So, is a merchant cash advance a good idea? Read on to help you decide.

How can small business owners benefit from merchant cash advance?

A merchant cash advance offers a business owner quick access to capital, but that doesn’t mean it’s always the best option. Let’s take a look at a few instances where an MCA can offer you a solid financial footing, and then we’ll talk about situations where it’s best to look at options other than a merchant cash advance.

Can a merchant cash advance be a smart move? Sure, if:

  • You can’t qualify for a traditional loan with a lower interest rate.
  • You’re heading into a period of strong sales and know you’ll be able to pay off the advance quickly.
  • You need the money to take advantage of an opportunity that will lead to higher sales numbers in the near future.

Maybe you’re running a young business with a track record that’s too short to qualify you for more competitive loans from traditional lenders. Products are flying off the shelves, but you’re still paying off initial startup costs and can’t access the capital you need to replenish your inventory. In this situation, a merchant cash advance could offer you a promising way out because the lump sum will be paid off using a percentage of your reliable sales volume. If the profit margin of each sale is significantly more than the anticipated interest rate, getting a merchant cash advance could help you preserve sales momentum while building cash flow. After you’ve paid off the advance, you’ll hopefully have enough working capital to function—ideally without getting another advance.

Can a merchant cash advance be a bad idea? Absolutely, if:

  • You can qualify for a better loan product such as accounts receivable financing or a business line of credit.
  • Sales numbers are slipping, and you’re worried they might not bounce back soon.
  • You don’t have a solid plan of how to pay off a merchant cash advance as soon as possible.

Maybe your business has been around for decades, but sales numbers are dwindling, and customers are flocking to your competitors. Although it’s tempting to think that a proverbial fresh coat of paint will bring people back to your business, it could be that you need to overhaul your products or services to restore your competitive edge. Ultimately, getting a merchant cash advance is a bad idea in this situation, because your sales probably won’t be strong enough to pay back the loan in the time allotted—and delayed repayment will make expensive capital even pricier. If your business is already struggling, borrowing money at a high interest rate is a gamble you don’t want to take.

Qualifications for a merchant cash advance

Annual Revenue

over $100,000

Minimum Credit Score


Time in Business

6 Months

How to qualify for a merchant cash advance

If business is booming, and you’re confident you can pay back a merchant cash advance quickly, the good news is that qualifying is relatively easy. Compared to other traditional loans that require extensive documentation, a lender will most likely want to look at your daily volume of credit card transactions to decide if you qualify.

Because a merchant cash advance is unsecured, you don’t need to provide collateral assets like business vehicles, an office, or equipment that the lender can repossess if you fail to make payments. As a result, it’s easier to qualify for an MCA, but you’ll need to make a personal guarantee acknowledging that the provider can pursue your personal assets if you fall behind on payments and eventually default.

Pros and cons of a merchant cash advance.

Getting a merchant cash advance can be a good idea in the right situation, but you should weigh the following pros and cons carefully:


  • A merchant cash advance can get you cash fast, and you could see the money in as little as 24 hours after approval.
  • You can adjust repayment terms to meet your specific criteria, whether it’s a short-term need or you plan to repay over several years.
  • Qualifying for a merchant cash advance can be easier than it would be for traditional financing, meaning something like a low credit score might not get in the way.


  • MCAs come with high interest rates, and they’ll add up quickly the longer it takes you to pay back the loan.
  • A merchant cash won’t help you build business credit because it’s not a traditional loan.
  • Having to give up a percentage of daily sales might make it more difficult to pay your other bills, so it’s important to ensure you have sufficient cash flow.

Our take on a merchant cash advance

You’re probably wondering, “Is a merchant cash advance a good option for my business?” Only you can decide, but here’s our take: If a merchant cash advance will generate more profits than the cost (or interest rate) of the advance, it’s worth considering. Once you’ve established a reasonable return on investment, your next step should involve researching how a merchant cash advance compares to some of the other financing options available to your business.