A merchant cash advance (MCA) is the fastest small business funding product available — and the most expensive. You receive a lump sum advance on your future credit and debit card receivables, repaid as a percentage of daily sales. Approval takes hours. Funding arrives in 24–72 hours. The cost is expressed as a factor rate, not APR — understanding that cost before signing is essential.
How Merchant Cash Advance for Small Businesses Work
An MCA is not technically a loan — it’s a purchase of future receivables. A factor rate of 1.30 on a $50,000 advance means you’ll repay $65,000 total ($50,000 principal + $15,000 cost). That $15,000 is the factor fee, collected over time as a daily percentage of your card sales (the ‘holdback rate,’ typically 10–20%).
Because repayment is tied to card volume, payments slow automatically when your sales are slow. This is the MCA’s core appeal for seasonal or cyclical businesses. But the APR equivalent is extremely high — a 6-month MCA with a 1.30 factor rate typically equates to 60–150% APR. Use MCAs for genuine short-term needs, not as a permanent capital strategy.
Stacking — taking multiple MCAs simultaneously — is common and dangerous. Each advance increases your daily holdback, reducing cash flow. Lenders who specialize in MCA stacking charge higher factor rates to compensate for the risk.
Rates, Amounts & Terms
| Product Feature | Details |
|---|---|
| Amount | $5,000 – $500,000 |
| Factor Rate | 1.10 – 1.50 (you repay $110–$150 per $100 advanced) |
| APR Equivalent | 40% – 150%+ (varies by term length) |
| Holdback Rate | 10% – 25% of daily card sales |
| Repayment Term | 3 – 18 months (varies with sales volume) |
| Speed | 24 – 72 hours from application to funding |
| Qualification | 500+ credit score; $10,000+/mo card volume; 6+ months TIB |
Rates shown are typical market ranges. Actual rates vary by lender, creditworthiness, and business profile. Verify with lenders before applying.
Typical Qualification Requirements
| Requirement | Typical Minimum |
|---|---|
| Time in Business | 6 months |
| Monthly Revenue | $10,000+ |
| Credit Score | 500+ (approval driven more by revenue than credit) |
| Card Volume | Strong daily credit/debit card sales required |
Best For
- High-card-volume businesses (restaurants, retail, hospitality)
- Emergency funding in under 72 hours
- Businesses that can’t qualify for conventional products
- True short-term gaps (30–90 days)
Not the Right Fit When
- Long-term capital needs
- B2B businesses with low card volume (invoice factoring is better)
- As an ongoing financing strategy — cost is too high
How to Apply
- Review the qualification requirements above. Confirm your time in business, monthly revenue, and credit score meet the minimums before applying.
- Prepare documents. Typically: 3–6 months bank statements, most recent tax returns (business and personal), and your business license. Some lenders require additional documents; the list is shorter for fast-funding products.
- Apply through our partner. Submit your information once, receive competing offers, and compare total repayment amount, APR, and payment structure before accepting.
Frequently Asked Questions
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Related: Working Capital Loans • Fast Business Loans • Business Line Of Credit • Bad Credit Business Loans
Written by the SBLT Editorial Team. This content is informational only and does not constitute financial or legal advice.
Advertising Disclosure: Small Business Loans Today receives compensation when you click links to our partner financing site. Rates and terms shown are typical market ranges — verify with lenders before making financial decisions. Not financial advice.
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