A merchant cash advance (MCA) gives your business a lump sum of cash now in exchange for a share of your future card sales or bank deposits. It isn't a loan. It's usually fast and easier to qualify for than a bank loan, but it's also one of the more expensive types of funding, so it fits short-term needs best.
Is a merchant cash advance a loan?
No. With an MCA, a funder buys a portion of your future sales at a discount. You get cash upfront, and the funder collects its share as your sales come in. Because it's structured as a purchase instead of a loan, it's priced and repaid differently.
How do you pay back a merchant cash advance?
There are two common ways:
- A share of each card sale (holdback). A set portion of your daily card sales goes to the funder. Busy days pay back more, slow days pay back less.
- A fixed daily or weekly ACH payment. A set amount comes out of your bank account on a schedule, whatever your sales were. It's more predictable but can be tough during slow stretches.
Repayment usually runs for a period of months, not years.
How much does a merchant cash advance cost?
Instead of an interest rate, MCAs use a factor rate. You multiply the advance by the factor rate to get the total you'll pay back.
For illustration only, with round numbers: a $50,000 advance with a factor rate of 1.3 means paying back $65,000 in total, so the cost is $15,000. Some offers also include origination or other fees.
Because MCAs are often repaid in a few months, that cost can be much higher than a bank loan or line of credit when you compare them over a year. Always ask for the total payback amount and every fee before you sign.
Who qualifies for a merchant cash advance?
Funders focus mostly on your sales history: how much your business brings in each month, usually shown through recent bank or card processing statements. Credit matters less than it does for a bank loan, and collateral usually isn't required, though a personal guarantee is common.
BRIDGEVANTI never runs a credit check. If you apply through one of our funding partners, they may do a soft credit pull, which doesn't affect your credit score.
When does a merchant cash advance make sense, and when doesn't it?
An MCA can make sense when:
- You need money fast for something that pays for itself quickly, like inventory for a busy season or a big order.
- Your sales are steady, but you don't qualify for a bank loan or can't wait for one.
It usually doesn't make sense when:
- You need money for a long-term project. A term loan or SBA loan usually costs less.
- Your cash flow is already tight. Daily or weekly payments can make it tighter.
- You'd be taking a second advance to pay off the first. That's called stacking, and it can turn into a cycle that's hard to break.
In our experience, a lot of owners think a bank loan is their only option and don't realize how many types of funding exist. Compare them side by side on our funding page so you can choose with your eyes open. See all funding options
What do you need to apply?
- Basic business and owner information.
- Recent business bank statements, usually a few months' worth.
- Recent card processing statements, if you take cards.
- A clear idea of how much you need and what it's for.
Frequently asked questions
Is a merchant cash advance a loan?
No. It's an advance against your future sales. A funder pays you a lump sum now and collects a share of your future card sales or bank deposits until the agreed amount is repaid.
What is a factor rate?
A factor rate is how MCAs are priced. You multiply the advance amount by the factor rate to get the total you'll pay back. It's different from an interest rate, so compare offers by the total payback amount and fees.
How fast can I get a merchant cash advance?
MCAs are among the fastest types of business funding. Once you apply and send your statements, decisions and funding can often happen within days.
Can I get a merchant cash advance with bad credit?
Often, yes. Funders look mainly at your sales history, so credit matters less than it does for a bank loan. BRIDGEVANTI never runs a credit check; funding partners may do a soft credit pull, which doesn't affect your credit score.
Does BRIDGEVANTI charge a fee to help me get an MCA?
No. BRIDGEVANTI doesn't charge any fees for funding. We connect you with funding partners and may be compensated by them for referrals.