Merchant Cash Advance Loans to Grow Your Small Business

We’ll get you the best merchant cash advance
financing with flexible terms to suit any business.

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Unsecured Funds

No personal guarantee*

We Fund Quickly

Funded within a few days

Simple & Easy

Past credit issues may be OK

Fast Approvals

Within 24 hours of application

MERCHANT CASH ADVANCE

Merchant cash advances let you repay a fixed percentage of daily sales transactions until the advance is paid back to the lender in full. MCA’s are available for small businesses that accept credit card payments.

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MAX FUNDING AMOUNT

$7,500 to $1 million

FACTOR RATES

Starting at 1.09%

TERM

3 – 18 months

SPEED

1-2 Business days

Intro To Merchant Cash Advances

If you need cash for your business right away, a Merchant Cash Advance could be what you’re looking for. This type of financing is one of the most easily accessible. Typical requirements like excellent credit or overflowing financial statements aren’t mandatory for eligibility.

Payments aren’t fixed, so you only pay what your cash flow can bear each month. And though it’s geared towards short-term initiatives, a Merchant Cash Advance doesn’t become more expensive if business slows down for a little while. This makes a Merchant Cash Advance very ideal for businesses that would struggle with the fixed monthly payments of traditional loans.

In this guide, we’ll answer the following questions and more:

Ready to take the next step and apply for a Merchant Cash Advance?

What Is a Merchant Cash Advance?

A Merchant Cash Advance (MCA) is sometimes referred to as “Credit Card Factoring” or a “Credit Card Processing Loan.” You receive a lump sum that gets paid back via a fixed percentage of future debit and credit card sales (Holdback Rate). Payments are automatically deducted each day, and the size of your payments fluctuates with your debit and credit card sales volume.

An MCA is not as challenging to qualify for as other business loans, so business owners with little collateral, history in business, or a low credit score may benefit from this option. The amount of funding your business qualifies for depends on the amount of credit card receivables, or the sales you make to customers who pay using a credit card.

With this kind of arrangement, you agree to receive a lump sum of your future credit card sales immediately from the lender instead of waiting weeks/months to get the full amount from the credit card processing company. This is known as an “advance.”

Funding Amount

$7.5K – $1M

Funding Term

3-18 months

Factor Rates

Starting at 1.09

Speed

1-2 Business Days

How Does a Merchant Cash Advance Work?

The size of your borrowing amount depends primarily on your previous debit and credit card sales. This is the main criterion for eligibility in general. As long as you have strong debit and credit card sales, poor credit or rocky cash flow probably won’t prevent you from qualifying.

However, your credit score and cash flow do impact several other elements of your Merchant Cash Advance. This includes the fixed percentage of daily or monthly sales that gets deducted, which is called your “holdback rate.” Typical holdback rates run between 8% and 15% of daily sales.

Instead of interest, each borrower is assigned a factor rate. This determines the total amount you’re going to repay to the lender. Factor rates typically range from 1.09 to 1.5.

Example of a Merchant Cash Advance:

For example, let’s say you borrow $50,000 with a factor rate of 1.4. This means you’d owe $70,000 in total. The business lender deducts 10% of your debit and credit card sales each time you batch out. In the first month, you generate $100,000 in credit card transactions. Based on your percentage, you’d pay $333 per day to pay back $10,000 for the month. In the second month, your sales drop to $70,000. Since the holdback percentage never changes, your daily payments would drop to $233.

Like other forms of short-term financing, a Merchant Cash Advance is designed to be paid back as soon as possible. However, the total cost decreases when your payments are more spread out as a result of slow sales.

Merchant Cash Advances – Research, Facts & Reports

Almost 64% of small businesses in America still deal with financing challenges including managing operating expenses, access to credit, and issues making debt payments. Source: Small Business Credit Survey: 2019 Report on Employer Firms

Online lending continues to grow. Morgan Stanley forecasts that by the end of 2020, online lenders/fintech companies will lend small businesses $47 billion. That’s 16% of the total small and midsize business credit approvals. Source: National Community Reinvestment Coalition

Debit and credit card payments increased 8.9% each year between 2015 and 2018 and ACH (Automated Clearing House) payments grew by 6% annually each year from 2015 through 2018. Source: 2019 Federal Reserve Payments Study: Initial Data Release

What Are The Advantages of Merchant Cash Advances?

Fewer products are easier to qualify for than a Merchant Cash Advance. If you have subpar credit, rocky cash flow, and less than one year in business, this may be the only way to get the funding you need. And since the requirements are so loose, you can get approved in under 24 hours.

The repayment structure for a Merchant Cash Advance is particularly advantageous for highly seasonal businesses or businesses that experience occasional dips in revenue. Slow months mean smaller payments, as opposed to paying the same amount each month, regardless of how well your business is doing. A seasonal business could theoretically use the funds during the slow season and pay off a good chunk of the loan during the busy season, even if the two periods are three or four months apart. When sales start to drop again after the busy season, you don’t have to worry about making the same size payments as before.

This scenario is ideal for a Merchant Cash Advance because your payments would fluctuate and be more spread out.

For example, let’s say you borrowed $100,000 with a factor rate of 1.3. This puts your principle at $130,000. If you paid off the entire loan in six months, your APR would be at least 60%. If you paid off the advance in twelve months, your APR would likely be closer to 30%.

What Are The Disadvantages of Merchant Cash Advances?

Loose requirements come with a cost. Borrowers with subpar credit and rocky cash flow are statistically less likely to pay off the loan on time. For this reason, a Merchant Cash Advance is one of the most expensive business financing products on the market. Larger payments offset the heightened degree of risk placed upon the business lender.

The size and frequency of your payments could also put tremendous pressure on your cash flow. You’d make large payments even if your sales remained strong for several months.

Lastly, there’s no benefit to paying off the entire loan early. Unlike more traditional products, you have to pay a fixed amount of fees, regardless of when you pay off the loan. This differs from business loans with amortization schedules, where paying early allows you to save on interest.

PROS

  • Get access to funds quickly
  • Approval process is easy
  • Less than perfect credit accepted
  • Use for a variety of business purposes

CONS

  • Higher rates & fees than traditional loans
  • May have to change merchant provider
  • Shorter repayment term may reduce cash flow

Merchant Cash Advance Compared To Other Products

LOAN TYPESMAX AMOUNTSRATESSPEED
Merchant Cash Advance$7.5k – $1mStarting at 1.091-2 business days
SBA Loan$50k-$10mStarting at 5%3-5 weeks
Business Term Loan$10k to $5mStarting at 5%1-3 business days
Business Line of Credit$10k to $250kStarting at 8%1-3 business days
Receivables/Invoice Factoring$50k-$10mStarting at 5.8%1-2 weeks
Equipment FinancingUp to $5m per pieceStarting at 5%3-10 business days
Revenue Based Business Loans$10K – $5mStarting at 9%1-3 business days

Who Qualifies For Merchant Cash Advances?

Approved businesses generally met the following criteria:

Annual Revenue

$120K+

Credit Score

550+

Time in Business

4 months+

How To Apply For a Merchant Cash Advance:

You can borrow up to $1 million, with terms of up to 18 months. Here’s how to apply:

Step 1: Consider Your Needs

Before you begin the application process, take some time to make sure this is indeed the right product for your needs and circumstances. Will you be able to use the funds for your desired purpose? Will the repayment structure do more good than harm to your cash flow? Do you know exactly how much funding to request? Answering these questions ahead of time will make the rest of this process much easier.

Step 2: Gather Your Documents

The application requires the following documents and information:

  • Driver’s license
  • Voided business check
  • Bank statements from the past three months
  • Credit card processing statements from the past three months

Step 3: Fill Out Application

You can begin the application process by calling us or filling out our one-page online application. At this stage, you’ll be asked to enter the information from the previous section along with your desired funding amount.

Step 4: Speak to a Representative

Once you submit the application, a representative will reach out to you to explain the repayment structure, rates, and terms of your available options. This will ensure that there are no surprises or hidden fees during repayment.

Step 5: Receive Approval

The process generally takes a few business days and once you’ve been approved, funds should appear in your bank account in 1-2 business days.

Your Merchant Processing Loan Gets Set Up – Now What?

Your business loan isn’t just a way to get financing for your business. It’s also an excellent opportunity to start building (or improving) your credit.

Regardless of the type of business loan you get, make all of your required payments on time and in full. If you get a business credit line or another form of revolving credit, keep your balance below the credit limit.

Consistently making your business financing payments on time and in full will have a positive impact on your credit. And that means preferred rates and terms when you next need business financing.

What If I’m Declined For a Merchant Cash Advance?

If your merchant loan application gets declined, it might be because your cash flow cannot withstand the daily repayment structure. In this case, we recommend another product that puts less pressure on your cash flow and is easier to repay.

If your business cannot afford to take on more debt at this time, we might also recommend a different financing tool. Possible examples include business credit cards or personal loans. Either option can help you build credit and will likely be easier to qualify for than business loans.

If you were declined for poor credit, you should consider credit repair services as well. They can help you boost your credit score by identifying the issues that are keeping your score down and creating a plan for eliminating them.

Ready to take the next step and apply for a Merchant Cash Advance?

People Also Ask:

What Is The Holdback Rate?

If your merchant loan application gets declined, it might be because your cash flow cannot withstand the daily repayment structure. In this case, we recommend another product that puts less pressure on your cash flow and is easier to repay.

If your business cannot afford to take on more debt at this time, we might also recommend a different financing tool. Possible examples include business credit cards or personal loans. Either option can help you build credit and will likely be easier to qualify for than business loans.

If you were declined for poor credit, you should consider credit repair services as well. They can help you boost your credit score by identifying the issues that are keeping your score down and creating a plan for eliminating them.

Can I Get a Merchant Cash Advance With Bad Credit?

MCAs are a valuable financing option for business owners with bad credit. It doesn’t rely on your ability to make timely payments. An MCA funder looks forward to your future credit card sales. The only backward look that interests an MCA funder is your most recent average inflow of credit card sales.

An MCA funder will usually want to see at least your last six months of credit card volume. They want to see how much your business typically processes in credit cards.  This information helps the funder determine how much cash they’ll advance your business and under what terms.

Are Merchant Cash Advances For Failing Businesses?

This is a huge misconception that originates from the product’s loose requirements. But the truth is, bad credit does not mean your business is failing. Many business owners have bad credit because they had no choice but to use personal credit cards to keep their business alive when they hit an early speed bump.

Also, bad credit is far from the only reason to seek a Merchant Cash Advance. Since this product is not categorized as a “loan,” it does not show up as “debt” or a “liability” on your balance sheet. If you already have too many liabilities, adding another one could hurt your business credit score and make it difficult to obtain trade credit from vendors.

How Much Can I Borrow With a Merchant Cash Advance?

In most cases, you can borrow anywhere from 50% to as much as 150% of your average debit and credit card sales. This average is based on the past three months’ worth of data. However, more significant amounts can take slightly longer to appear in your bank account.

When Is a Merchant Cash Advance a Good Idea?

The number one requirement of a Merchant Cash Advance is strong debit and credit card sales. If at least 40% to 50% of your monthly revenue comes from these payment methods, you may be a good candidate for this product.

Other forms of short-term financing tend to carry fixed, monthly payments. This is just fine if your weekly or monthly revenue is predictable and stable. These products are also cheaper if you pay them back as quickly as possible. Thus, a Merchant Cash Advance may be a better choice if your revenue is more tumultuous, and you need more time to pay off the loan in full. Neither of these circumstances would make the loan more expensive.

Lastly, the accessibility of a Merchant Cash Advance isn’t affected by a lower borrowing amount. It might be more challenging to find a Business Line of Credit or Working Capital Loan for under $10,000. If you’re looking for a smaller amount and don’t want to take on unnecessary debt, a Merchant Cash Advance may be one of your only options.

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