What is a merchant cash advance (MCA) and how does it work?

A merchant cash advance (MCA) is an alternative business funding option where you receive upfront capital in exchange for a portion of your future revenue. Instead of a loan, it’s structured as a sale of receivables. MCAs are especially popular among small businesses, startups, and entrepreneurs with strong daily or weekly cash flow who may not qualify for traditional bank loans or SBA financing. Funds are delivered quickly, often within 24–48 hours.

Who qualifies for a merchant cash advance and what types of businesses use them?

Merchant cash advances are ideal for businesses with steady incoming deposits, such as retail stores, restaurants, trucking companies, e-commerce sellers, and service providers. Even if your credit score is less-than-perfect, you may still qualify based on revenue strength. Qualifications often include 3+ months in business, $5,000+ average monthly revenue, and a healthy deposit history in your business bank account.

How are merchant cash advances repaid and what are the repayment terms?

MCAs are typically repaid via automatic daily or weekly withdrawals from your business bank account, or as a percentage of your credit card or gross sales. Instead of interest rates, MCAs use a factor rate (e.g., 1.4x), meaning you repay a fixed amount based on the original funding amount. The repayment adjusts with your cash flow, making it flexible for businesses with variable income.

Will applying for a merchant cash advance hurt my credit score?

Most MCA providers use soft credit pulls or base approvals entirely on bank statement data—meaning your FICO score won’t be impacted during the application process. Because merchant cash advances don’t report to major credit bureaus, repayment usually does not affect your business or personal credit history.

How fast can I get approved and funded through a merchant cash advance?

Approval and funding timelines for MCAs are among the fastest in the industry. With platforms like FundingEstimate.com, you can upload your bank statements and receive multiple MCA offers within minutes. Funding can be deposited in as little as 24–48 hours, with minimal paperwork and no collateral required.

What are the pros and cons of using a merchant cash advance versus a traditional loan?

MCAs provide rapid access to working capital with fewer documentation requirements, no fixed repayment schedule, and no collateral. However, they tend to carry higher costs than traditional loans or lines of credit. Businesses should compare options based on cash flow needs, urgency, and repayment flexibility before choosing an MCA.

Is a merchant cash advance the same as a business loan or line of credit?

No—while they all provide funding, an MCA is not a loan. It’s a purchase of future receivables and doesn’t require the same underwriting as loans or lines of credit. MCAs don’t charge interest or require set repayment dates, making them more flexible but potentially more expensive.

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Updated July 11, 2025

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