A clear, honest guide to merchant cash advances — how they work, what they cost (factor rates explained), pros and cons, and smarter alternatives.
Our editorial team consists of experienced business finance writers and lending professionals with 15+ years in commercial lending.
A merchant cash advance (MCA) is not a loan — it's a purchase of future receivables. A lender gives you a lump sum of cash today in exchange for a percentage of your future daily sales until the advance (plus fees) is repaid.
Repayment happens automatically via daily ACH debits from your business bank account, calculated as a percentage of your daily deposits (typically 8–20%). On high-revenue days, you pay more. On slow days, you pay less. There are no fixed monthly payments.
MCAs use **factor rates** instead of APR. A factor rate of 1.3 means you repay $1.30 for every $1.00 advanced.
Example: $100K MCA at 1.35 factor rate = $135K total repayment.
Factor rates range from 1.1 (excellent credit, strong revenue) to 1.5 (higher risk profiles). Unlike interest rates, factor rates don't decrease as you pay down the balance — the total cost is fixed upfront.
WARNING: Always calculate the equivalent APR. A 1.35 factor rate repaid in 6 months equals roughly 70–80% APR. MCAs should be used for short-term, high-ROI needs only.
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An MCA is worth the higher cost when:
Do NOT use an MCA for long-term funding needs, debt consolidation, or to cover ongoing operating losses.
FAQs
Funding Products
Compare working capital, SBA loans, equipment financing, invoice factoring and more.
$10K–$500K
Access $10K–$500K in working capital within 24–48 hours. No collateral required, flexible repayment based on your daily revenue.
✓ Cover payroll, inventory, and operating costs without slowing down.
Speed
24 hours
Term
3–18 months
$25K–$2M
Structured term loans from $25K to $2M for established businesses. Fixed monthly payments with transparent rates.
✓ Predictable payments, no surprises — perfect for planned growth.
Speed
2–5 days
Term
12–60 months
$5K–$500K
Get an advance on your future sales. Repay as a percentage of daily revenue — no fixed payments, no pressure.
✓ Flexible repayment that moves with your cash flow.
Speed
24 hours
Term
4–18 months
$10K–$5M
Finance any equipment — trucks, machinery, technology — from $10K to $5M. The equipment itself serves as collateral.
✓ Preserve working capital while acquiring assets that generate revenue.
Speed
2–5 days
Term
24–84 months
$50K–$5M
SBA 7(a) and 504 loans with government-backed guarantees. Rates from 6.5% — the best terms available for qualifying businesses.
✓ Lowest interest rates with the longest repayment terms on the market.
Speed
30–90 days
Term
10–25 years
$10K–$5M
Convert outstanding B2B invoices into immediate cash at 80–95% of face value. No debt, no collateral.
✓ Eliminate the 30–90 day wait on customer payments.
Speed
24–48 hours
Term
Per invoice
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