What is a Merchant Cash Advance?

A merchant cash advance (MCA) is an advance on your credit card sales. It is not a loan, but rather an advance based on your credit card sales deposited into your business’ merchant account.

A merchant cash advance is a quick way to get your business the working capital it needs, rather than waiting for it to come in as customers pay. By buying a future portion of your credit card sales, it will provide your business with an upfront, lump sum of cash, enabling you to put your credit and debit card receivables to work right away.

Whereas a bank or lender will look at your creditworthiness to evaluate your risk, a merchant cash advance provider evaluates risk differently. An MCA provider will look at your daily credit card receipts to evaluate if a business can pay back the advance on time. As a result, rates on an MCA will be different from other financing options so understand the terms offered so that you can make an informed decision to determine if an MCA works for you.

Benefits to a merchant cash advance

Business owners can often access capital fast with an MCA. They also make sense for a business that needs to access capital quickly. Because qualifying for a MCA is often easier than a loan, an MCA may often be more expensive than a loan.

Since an MCA offers quick access to capital, they make sense for a business needing to: