What Is An MCA? Your Guide to Merchant Cash Advances

Did you know that cash flow accounts for 82% of business failure?

Without enough cash, your business will be part of the statistics. If your business is experiencing financial challenges, you might want to consider external assistance.

A merchant cash advance is an ideal lender for small businesses that can’t access traditional bank loans.

Are you wondering what is an MCA? This comprehensive guide has detailed everything you need to know about merchant cash advance.

What Is an MCA?

A merchant cash advance refers to a business financing option that allows businesses to sell their anticipated future profits to get upfront money. This cash advance is often based on a company’s credit card sales. If your current sales and projected profits are promising, you have a high chance of loan approval.

Therefore, an MCA is not like a typical loan since you’ll be getting an advance based on your potential income. As such, it is like borrowing your own money, only that you will pay the MCA provider.

After an MCA lender approves your request, you’ll get the amount in your business account. The process can take a few days or even hours. For business owners who need cash urgently, a merchant cash advance is an excellent option.

How Does an MCA Work?

An MCA works by having a business borrowing an amount of cash from a lender then paying incrementally via customer card payments. You can use this loan to grow your business or make it more visible.

A merchant cash advance will finance you based on your projected income. The lender will check your average turnover and the approximate amount the lender feels you can repay. The documentation needed to get the cash includes identity proof, business tax returns, and credit card processing, and bank statements.

You can get an amount as high as $200,000. However, it is critical to note that the repayment period is considerably shorter regardless of the amount you have borrowed. Merchant cash advance default can have adverse impacts on your business, making it crucial to be confident of your sales potential before turning to an MCA.

If you have all the documents ready, applying takes a few minutes. You’ll get approval if you meet the requirements of your chosen lender. In three days or less, your business account will receive the money you borrowed.

The repayment starts as soon as you get the funds. A lender will determine the interest rate based on your factor rate and your advance amount. The factor rate is usually a percentage of the amount given as advance.

Benefits of a Merchant Cash Advance

If you have already understood what is an MCA, you need to know if it’s good for your business. Here are the top benefits of MCA to consider when making a decision:


MCAs are quite flexible as compared to many other lending options. When you get your loan, you can utilize the funds in a way that you deem fit. You also have several options when it comes to repayment plans.

The repayment depends on your daily sales; you can repay an amount that doesn’t constrain you. Businesses that have fluctuating sales can find this idea reasonable.

Easy Repayments

The process of repaying the MCA loan is often less daunting than other types of loans. The lender connects with the card provider directly to take a percentage of the paid cash as per the agreement. The money is taken at the source, just like what happens with income tax.

You’ll be hands-off the whole process. Therefore, it will be easier to focus more on running your business than filling forms and making endless calculations.

No Need for Collateral

The number of American personal loan borrowers currently stands at 20.2 million. Most lenders often ask for security to avert non-repayment. If you don’t have sufficient security or a commendable credit score, you might not get a loan.

A merchant cash advance provides unsecured loans. You don’t have to worry about tying up any of your assets to get the loan. For businesses with limited assets, this should be the least of your worries.

Minimal Qualifications

MCA lenders focus solely on your credit card processing statements. They will hardly check your credit score or business assets. The lender’s primary concern is to know the amount of money you’re capable of repaying.

These terms are somehow lenient for small business owners and startups with credit score problems. Nonetheless, a good credit score is crucial when determining your factor rate. It will help you have a lower MCA cost.

Fast and Easy Application

If you need money urgently, an MCA is your ideal option. Getting cash through an MCA is fast. Loan approval can take a few hours, and within three days, you’ll have the money in your account.

The lenders don’t have intensive regulations. As such, you can’t compare the speed to most traditional lenders.

Despite the undeniable benefits of a merchant cash advance, you need to understand that the option depends mainly on your turnover. Besides, MCA only works if you use the card terminal as your primary mode of receiving payment.

If you understand how a merchant cash advance works, you ensure that your business meets all the requirements before applying. The benefits of MCA are evident, especially for small business owners.

Fund Your Business With Merchant Cash Advance

A merchant cash advance is an alternative source of business financing. Yet, many people don’t know about it. It’s not surprising to hear a seasoned business owner asking, “What Is An MCA?”

If you are looking for an easier way to get funds for your business, an MCA is an option you don’t want to ignore. You can get business funds effortlessly as the process is seamless. It is easier to get cash from MCA than from a traditional lender.

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