Merchant Cash Advance Loans (MCA) For Good & Bad Credit

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Merchant Cash Advance (MCA) Loans

What is a merchant cash advance?

A merchant cash advance is a type of funding that’s typically used by businesses to cover short-term expenses or to take advantage of opportunities that require immediate capital.

Unlike a traditional loan, a merchant cash advance is not paid back in fixed installments over time. Instead, the amount borrowed is repaid through a percentage of the business's future credit and debit card sales. This repayment structure is often beneficial for companies because it allows them to repay the funding as their sales increase. Merchant cash advances are typically provided by alternative lenders, such as online platforms or private investors.

Another advantage of merchant cash advances is that they are often easier to obtain than traditional loans since they aren't based on the borrower's creditworthiness. Instead, they are based on the strength of the borrower's future sales. As a result, merchant cash advances can be a good option for businesses that do not have strong credit scores but still need access to capital.

How Does a Merchant Cash Advance Work?

A merchant cash advance (MCA) is a type of funding that allows businesses to borrow money based on future sales. Unlike a traditional loan, an MCA does not require fixed payments. Instead, the lender agrees to collect a percentage of the borrower’s daily credit card sales until the loan is paid off. This makes MCA a popular option for businesses that have an irregular or fluctuating income.

MCAs are typically offered by alternative lenders, such as online platforms or private investors. The application process is often less complex than for a traditional loan, and funding can be delivered in as little as 48 hours. 

However, MCAs typically come with higher interest rates and fees than loans from banks or credit unions. As a result, they should only be used for short-term financial needs. Businesses with strong future sales growth potential may also find MCAs to be a good option, since they can use the extra funds to invest in inventory or expand their operations.

What is a merchant cash advance used for?

A merchant cash advance (MCA) is a type of funding that allows businesses to borrow money against future sales. MCA providers typically advance an amount based on a percentage of the business's monthly credit card sales volume. Repayments are then automatically deducted from the business's credit card sales, making repayment easy and flexible. 

MCA providers also typically don't require collateral, making them an attractive option for businesses that may not qualify for traditional bank loans. In addition, MCAs can be used for a variety of purposes, such as funding inventory or equipment purchases, covering operational expenses, or financing marketing campaigns. 

Because MCAs are repaid with a portion of future sales, they're often used by businesses that need short-term funding but expect increased sales soon. For example, a seasonal business might use an MCA to finance inventory purchases before their busy season begins. Likewise, a business launching a new marketing campaign might use an MCA to cover the upfront costs. 

MCAs are best suited for businesses that need quick access to capital and expect to have increased sales in the near future.

Pros and cons of merchant cash advances

One popular option for small businesses looking for short-term working capital is a merchant cash advance (MCA). Here are some pros and cons.


  • Easy to secure
  • Little documentation required
  • Repayment as a percent of daily credit card sales
  • No fixed repayment schedule


  • Expensive
  • Do not build business credit
  • Daily payments can interrupt cash flow

What type of businesses do merchant cash advances help?

Merchant cash advances provide a much-needed lifeline for small businesses that may not have access to traditional forms of financing. By providing a lump sum of cash in exchange for a portion of future sales, merchant cash advances can help businesses that are struggling to make ends meet. In particular, businesses that are seasonal or have irregular income streams can benefit from the flexibility that a merchant cash advance provides. 

In addition, businesses that are expanding rapidly or making a large one-time purchase can also find merchant cash advances to be helpful. Ultimately, merchant cash advances can be a useful tool for businesses of all types.

Is a merchant cash advance legal?

While a merchant cash advance is not illegal, it is not subjected to the same regulations that a loan is subjected to. That’s because this type of advance is legally classified as a sale, so lenders are able to charge significantly higher rates than they could with a typical personal or business loan.

What is the difference between a cash advance and a loan?

With both merchant cash advances and loans, a specific sum is made available to the borrower at one time. However, while a loan is repaid in fixed monthly, weekly or daily installments, the repayment of a cash advance is based on a portion of how much the borrower makes in each revenue cycle.

Benefits of MCAs

  • Quick Money: MCA funds can be made available to a borrower in as little as one business day, with minimal paperwork involved.
  • Easy application: While many traditional business loans may require business owners to provide extensive documentation or even apply in person, most MCA applications are quick, easy, and online.
  • Unsecured, no collateral: MCAs do not require any collateral, meaning that you don’t have to put your personal assets on the line when you sign up for an advance. However, an MCA lender may require you to sign a personal guarantee, meaning that you agree to be fully responsible for the payment of the advance in case of default. In some cases, this could allow a lender to seize your assets.
  • Money arrives quickly: Whereas some business loans may take months after approval to become available, many MCAs can be made available in as little as one day.
  • Credit does not need to be high: Because merchant cash advance approvals are primarily based on your stream of income and revenue statements, this type of lender does not put so much emphasis on an applicant’s credit score. However, most lenders require credit checks and don't offer merchant cash advances without a credit check.
  • Fixed percentage = lower payments with lower sales: This type of loan can be ideal for businesses with unsteady streams of income because payments are based on how much a business makes each month.
  • Flexible payments: In addition to making payments based on your business’ monthly income, MCAs can come with more flexible repayment terms and may be more willing to work with you in case of late payment.
  • High limits: If you’re having trouble getting approved for a large business loan, you may be able to get a higher amount of money advanced to you through an MCA.

Drawbacks of MCAs

  • High APR: While MCAs provide a fast cash option, are easy to qualify for, and have flexible repayment terms, their interest rates can be in the triple digits. This type of funding is one of the most expensive financing options in the business loan and advance industry.
  • More Sales = Higher Payments: Although lower sales mean lower payments, the opposite holds true for higher sales. This means that if you make a large amount of money in a revenue cycle, a larger portion of that will be taken to repay the advance.
  • Unsecured, no oversight: There is no federal regulation for MCAs, so this type of lender is not legally obligated to be as transparent as traditional business lenders and banks.
  • Easily go into more debt: Due to the complicated repayment structure of an MCA, having higher payments in higher-revenue periods can perpetuate or send a business into a cycle of debt that is difficult to get out of.

What is the cost of a merchant cash advance?

A merchant cash advance is a type of funding that is provided to businesses in exchange for a portion of future sales. The advance is typically based on a percentage of the business's monthly credit card sales, and the repayment terms can vary depending on the lender. In general, merchant cash advances are more expensive than traditional loans, with rates ranging from 9 to 60% of the borrowing amount.

Will my business be approved for a merchant cash advance?

The main factor that determines whether or not your business can be approved for a merchant cash advance is whether or not you accept payments via credit cards and debit cards. If you have a storefront where credit cards and debit cards are used frequently to pay for goods and services, then you may be able to qualify for a merchant cash advance. The same goes for if you operate an eCommerce website or another type of business that accepts credit and debit card payments but you do not have a storefront or a physical location. 

The main qualifying factor for a merchant cash advance is a high volume of credit and debit card payments on a daily and weekly basis. 

A merchant cash advance is not technically considered a business loan in the traditional sense, instead, it’s  an advance against your future credit and debit card sales. The way you pay back the merchant cash advance is by devoting a percentage of your daily credit and debit card sales to the amount borrowed. Payments are collected by the lender either on a daily or weekly basis. In return for the merchant cash advance payment upfront, the lender will require interest paid in the form of a factor. For example, if you borrow $10,000 at a factor of 1.25, then you will be required to pay back a total of $12,250. 

Once the MCA is paid back in full, often the lender can offer you an additional upfront advance payment or you can decide to close the MCA. 

Is merchant cash advance a loan?

Yes and no, let us help you understand. Technically, a merchant cash advance is a loan because it is an upfront lump sum payment provided to a business that needs to be paid back over a period of time with interest. For that reason, an MCA may be considered a type of business loan. 

However, a merchant cash advance does not work like a traditional business loan. Furthermore, they are not regulated by the same regulatory bodies that traditional types of business financing are. Because of this, lenders and companies that specialize in merchant cash advances do not have to abide by the same rules and regulations that banks, credit unions, online lenders, and the SBA have to. Instead, MCAs are governed by state laws that can put some restrictions on interest rates and the amount you can borrow depending on the state where you operate. 

Merchant cash advances work differently than traditional types of business financing in that they are not paid back with installment payments. Instead, the payments are typically debited directly from a business’s checking account where its credit and debit card payments are deposited daily. The payments can be withdrawn automatically on a daily or weekly basis until the original amount, the factor amount, and any additional interest or fees are paid in full.

Merchant cash advances are also different from traditional types of business financing like SBA and term loans because they can often cost much more. Depending on your creditworthiness, an MCA could come with a factor of up to 1.50. If you obtain a merchant cash advance with a factor of 1.50, that means if you borrow $10,000, you will need to pay back at least $15,000 before the debt can be absolved. 

One last main difference between traditional types of business financing and merchant cash advances is the fact that payments are not reported to a credit reporting agency. That means that if you are a new business relying on MCAs for financing, you are not working on building your business credit score at the same time as you would with other types of financing. 

How much can you get with a merchant cash advance?

The amount you can borrow for a merchant cash advance can vary but will generally range between $5,000 to $500,000. However, merchant cash advances can be for amounts anywhere from $2,500 to $1,000,000. As a business owner, when you first apply for a merchant cash advance, the lender or MCA company should review all of your merchant accounts and credit card processing account statements. They can also take into consideration 3 to 6 months of bank account statements and some basic information about your business. Based on cash flow and credit history, the MCA company can determine how much your business qualifies for. 

What are merchant cash advances used for?

A merchant cash advance can be used for any purpose that a business sees fit. However, typically MCAs are used to cover short-term expenses like emergency repairs of infrastructure, machinery, or equipment, or to cover operating expenses during an economic downturn. 

For example, if you own your own business and a furnace goes down or a pipe bursts and you need it fixed right away to get your business operational again, a merchant cash advance may be a good short-term option for you. This is especially true if your business is newer and lacks the credentials and credit history to obtain other types of financing. Additionally, MCAs can be funded right away so you can get the money you need as soon as possible to make the repairs you need and to get operational once again. 

Is merchant cash advance legal?

Yes, merchant cash advances are 100% legal. However, each state may have its own rules and regulations that may put limits on how much someone can borrow using an MCA and how much a lender or finance company can charge for servicing a merchant cash advance. 

What happens if you default on a merchant cash advance?

If you should happen to default on a merchant cash advance, it should not harm your credit score, but you can be found in breach of contract. An MCA is a contract between a borrower and a lender. If you are found in breach of that contract, the lender who provided the MCA has the right to sue you in civil court. 

Additionally, many merchant cash advances come with a Confession of Judgement requirement. When you sign a Confession of Judgment, you are preemptively signing away your right to a defense in a civil suit brought forward by the lender. 

Basically, if you fail to pay your MCA, they can win a judgment against you and come after your business assets to cover the remaining debt amount plus any damages that may have been awarded.  

Can I get a merchant cash advance with bad credit?

The main benefit of a merchant cash advance is the fact that they are much easier to qualify for compared to other types of business financing. 

SBA and conventional term loans require an incredible amount of paperwork, and often the minimum requirements for qualifying are out of reach for many business owners, especially new businesses. 

In addition, SBA loans, and sometimes term loans, often require a high credit score, a large amount of revenue, and at least 2 years of time in business. 

On top of that, the loan application, approval, and funding process can often take up to two months or longer for SBA loans and term loans typically require several business days. 

For many businesses who need cash now, an SBA loan does not make sense, and a merchant cash advance can be worth the higher interest and fees, especially if you have bad credit.

Bad credit borrowers who own businesses may need to rely on merchant cash advances until they can improve their personal credit scores to a level that they can qualify for an SBA or conventional business loan. 

  • Short term
    • A short-term cash advance can be used for one-time expenses such as emergency repairs, a gap in payroll funds or equipment repairs. While a borrower repays the loan in a shorter period of time, this also means that payments will be larger.
  • Long term
    • A long-term cash advance is more difficult to get approved and usually requires decent credit. MCA lenders are typically hesitant to issue this type of advance because the longer the repayment term is, the less likely the advance is to be repaid. If you have strong enough financial qualifications to obtain a long-term advance, you might want to consider applying for some business loans that offer lower or fixed rates.
  • Multiple position
    • A borrower might take out a second, third, or even fourth position advance when they have existing financing that has not been fully paid off. This type of funding can be useful if you are looking to consolidate debt and have access to a loan that can help you do this at a lower rate than before. However, it becomes easier to fall into the debt cycle if you take out too many loans.
  • Consolidation
    • Business debt consolidation allows you to take out one large loan to pay off several small loans. This form of financing is only ideal if you are able to get a large loan with a low enough APR to reduce the overall cost of your smaller loans.

How to pay back a merchant cash advance

  • ACH Withdrawal / Split Advance / Lockbox: When you agree to a loan, you may be able to set up auto payments through your bank account using an ACH withdrawal, a split advance, or a lockbox payment, where you send the payment directly to a bank-operated mailing address.
  • Credit card sale percentage
    • Payment period ranges: MCA loan terms typically range between three and 24 months and the payments are usually made on a weekly basis.
    • Pros/Cons: The benefit of this type of borrowing is that you can pay the loan off in a much shorter period of time than with some traditional bank loans. However, this form of repayment can take a bigger chunk out of your weekly or daily earnings than you can afford.
  • Fixed daily withdrawals
    • Payment period ranges: If you’re making fixed daily payments on a merchant cash advance, you’re more likely to be repaying the loan within just a few months.
    • Pros/Cons: While you’ll repay the loan in a very short period of time, you also might be at a higher risk of defaulting on the loan if you’re unable to produce a high enough revenue stream to pay everything back in a timely manner. If you’re behind on other payments, this can also present a higher risk.

Credit Risks

  • Is there a risk to Credit when applying for MCAs? MCA lenders may make a hard credit pull when evaluating your credit. Depending on your credit report and history, this could negatively affect your score.
  • MCAs with Good Credit: If you do have good credit, you might want to consider applying with more traditional lenders who often charge lower rates, are more highly regulated, and can make funds available within a similarly short period of time. Remember that if you have a high revenue stream, as long as you’re not using a loan that charges prepayment fees, you can always pay more of the loan in advance without any negative financial impact.
  • MCAs with Bad/No Credit
    • How does bad credit affect MCA or financing? If you have a bad credit score, an MCA might be one of just a few options. In this case, a lender will look primarily to your revenue stream to make a decision on your application for the advance. You may also be required to offer a personal guarantee in which you agree that the lender may go after your assets in case you default on the loan.

How to qualify for a merchant cash advance

Merchant cash advances can provide fast access to cash, and you don’t need perfect credit to qualify. Specific requirements can vary, but most lenders will have a minimum time in business and minimum monthly revenue requirement. In addition, you must accept credit cards to use an MCA.

To apply for a merchant cash advance, businesses may need to provide financial statements, tax returns, and bank statements. Once approved, businesses can receive funding in the form of an upfront lump-sum payment. Repayment is then made through daily or weekly automatic deductions from the business’s credit card sales. 

How to Apply for a Business Cash Advance

Applying for a business cash advance is a straightforward process that can be completed online in just a few minutes. At PrimeRates, you can check offers for MCAs to simplify the process. Whether you have good credit or bad credit, you can qualify for an MCA. As an alternative to traditional bank loans, MCAs can give small businesses more opportunities. Especially if they are unable to qualify for a traditional loan. While MCA’s may offer a temporary solution, make sure you take into account the pros and cons.

Are merchant cash advances a good idea?

MCAs are typically easier to obtain than traditional loans, and they can provide businesses with much-needed capital in a relatively short period of time. However, MCAs also come with higher interest rates and fees than other financing types, making them expensive in the long run. Additionally, because MCAs are repaid through credit card sales, they can put a strain on cash flow during slow periods. Finally, MCA’s don’t help build business credit either so you’ll be paying a high price without the incentive of boosting your business credit score.

As a result, it’s essential to carefully consider the pros and cons of MCAs before taking out this type of financing.

Alternatives to MCAs

For Borrowers With Bad Credit

Loan Amounts $5,000 to $500,000
APR Range As low as 9.99%
Repayment Terms Term loans up to 3 years
Time to Funding As fast as 1 day
Click “Check Rates” to apply to OnDeck

Why OnDeck instead of MCAs?

While rates on MCAs can soar into the hundreds, an OnDeck business loan APR is capped at 99% for term loans and 63% for lines of credit. Payments on both of these forms of financing are fixed, so you’ll know each month how much you have to repay. Additionally, their loans can be made available within just 24 hours of approval and they have loan terms ranging up to 36 months.

Pros of OnDeck:

  • Longer loan terms
  • Lower APRs
  • Fixed payments
Loan Amounts $2,000 to $250,000
APR Range 24% to 99%
Repayment Terms 6, 12, or 18 months
Time to Funding A few minutes to several days
Credit Score 560+
Click “Check Rates” to apply to Kabbage

Why Kabbage instead of MCAs?

Like OnDeck, Kabbage’s term loan APRs are capped at 99% and are also repaid on a fixed-term basis. Their loans can also fund as quickly as just a few minutes.

Pros of Kabbage:

  • Very quick to fund
  • Fixed payments
  • Lower APRs
Loan Amounts $5,000 to $250,000
APR Range 30.00% to 70.00%
Repayment Terms Up to 18 months
Time to Funding As fast as 1 day
Click “Check Rates” to apply to QuarterSpot

Why QuarterSpot instead of MCAs?

QuarterSpot offers term loans with fixed repayment terms and APRs of up to 70%. If you’re approved for a QuarterSpot loan, the overall cost of the loan will more than likely be significantly lower than it would be with a merchant cash advance of similar value.

Pros of QuarterSpot:

  • APR capped at 70%
  • Easy for low-credit borrowers to get approval for
  • Fixed payments
  • Quick to fund

» MORE: Business Loans For Poor Credit

For Borrowers With Unpaid Invoices

Loan Amounts $1,000 to $100,000
APR Range 10.1% to 79.8%
Repayment Terms 3 to 6 months
Credit Score No minimum personal credit score required
Time to Funding A few minutes to several days
Click “Check Rates” to apply to FundBox

Why FundBox instead of MCAs?

FundBox offers invoice financing for amounts of up to $100,000. Instead of relying on your weekly or daily revenue stream to determine the payments, your payments will be made as your clients repay the invoices.

Pros of Fundbox:

  • Dependent on client payments
  • Quick to fund
  • Usually lower cost than MCA

Invoice Factoring
Loan Amounts $20,000 to $5 million
APR Range 15% to 68%
Repayment Terms Up to 13 weeks
Time to Funding N/A
Click “Check Rates” to apply to Blue Vine

Why BlueVine instead of MCAs?

  • BlueVine offers invoice factoring of up to $5 million, even to borrowers with low credit scores. This lender offers more flexible repayment terms and access to a wide range of loan amounts. Pros of BlueVine:
    • High maximum loan amount
    • Quick to fund
    • Online application
    • Will work with low credit borrowers

    » MORE: Compare Invoice Factoring Options

    Other Alternatives to MCAs

    • Short term business loans: With a short-term business loan, you can repay the loan in a shorter period of time than with a traditional business loan, meaning that you’ll usually have the loan paid off within three months.
    • Poor credit business loans: Many lenders are willing to work with borrowers or businesses with bad credit who agree to commit collateral or pay higher rates than a traditional business loan.


      Although a merchant cash advance offers fast cash to borrowers who are in a hurry, this type of funding should be seen as a last resort. Due to the very high-interest rates and frequency of repayments, an MCA can be one of the most expensive forms of financing options.

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