CALL TOLL FREE 844-850-6769

Merchant Cash Advance

Get working capital now and use your future earnings to pay it off.

Merchant Cash Advance

With a merchant cash advance, you are borrowing against your future earnings. Most of the time, this means that you’ll pay back the funding with a portion (usually around 10-percent to 20-percent) of every credit card sale you make. Unlike other funding types, the fees for a merchant cash advance (sometimes referred to as an MCA) are determined with a “factor rate.” This factor rate is usually around 1.14 to 1.48. Let’s look at an example. If you borrowed $10,000 with a 1.20 factor rate, then you would need to pay back $12,000. The math is easy. You simply multiply the funding amount with the factor rate. That gives you the amount you will need to pay back. (You should know that there can be other fees involved as well, such as an origination fee and documentation fee.)

A merchant cash advance typically has a higher cost than other kinds of small business funding options. This makes it a last resort for companies that need to fund a cash flow gap.

Merchant Cash Advance at a Glance

The first question you should ask yourself before taking out a merchant cash advance is whether or not you’ll be able to pay it back with the added fees. Factor rates on merchant cash advances can be high. Here are the main points:

  • The maximum funding amount for a merchant cash advance will be determined by your provider.
  • Your merchant cash advance will have a factor rate instead of an interest rate. Your factor rate could be anywhere from 1.14 to 1.48 or higher.
  • The funding term for a merchant cash advance is a little different than with other types of funding. Since you are borrowing against your future earnings (and since you pay it back as you earn money) the term is determined by how long it takes you to earn enough money to pay back the funding and the fees. On average, this takes around eight to nine months.

Main Advantages

The main advantage of a merchant cash advance is that businesses with bad credit or a limited credit history still have a chance of being approved. Also, this type of funding generally doesn’t require collateral.

You tend to get your merchant cash advance funds faster than you would with a different type of funding.


You’ll likely pay more for a merchant cash advance than you’d pay for a different type of small business funding. This is because of the factor fee. Plus, additional fees can be stacked on top.

Also, there’s bad news if you plan on using a merchant cash advance to build up your business or personal credit score – your merchant cash advance payments will not be reported to credit bureaus.

Merchant Cash Advance Wrap-Up

The approval process is fairly straightforward. The provider will likely look through your bank statements from the past six months. You could be approved for funding as soon as one business day.

A merchant cash advance is generally used for emergencies or by businesses with low credit scores. Because of the high fees, it doesn’t make sense to use a merchant cash advance for other purposes.

Is this financial product right for you?


Our service is free and
doesn’t affect your credit score!