A merchant cash advance, also known as an MCA, is a lot like a paycheck advance in that it provides quick cash for the person/business taking out the loan. In this article, we’ll take a closer look at MCA’s and how they work.

What is an MCA?

This is a cash advance offered by the lender against their future sales. This is typically available to businesses that have steady credit card sales. The business will receive a payment from the lender and then, as they make sales to their customers, will make payments on the loan.

How Do They Work?

This is typically a fairly quick process. Once approved, the payment should come within a few days of your application. Documents required for application include:

State issued ID
Bank/credit card processing statements
Business tax returns

Additionally, you may want to keep a check on your credit score, as the lender may run a soft pull. You’ll want to have a good idea of what they may find when they do.

The amount is usually a few thousand dollars up to over $200,000 and the payback time is typically sort (18 months or less). The lender will usually take a percentage of your daily credit/debit card sales.

What’s the Actual Cost?

This is where it gets tricky because it’s not based on an APR or interest rate, but a factor rate ranging between 1.2 to 1.4. This will be applied to the total of your MCA to calculate what your loan will actually cost you.

Advantages vs. Disadvantages

There are both advantages and disadvantages to a merchant cash advance. They are as follows:


No collateral required
Quick/easy application process


Higher cost
Potential cash flow issues
May be required to change processors

If you believe that your business could benefit from a merchant cash advance, contact Emerald Valley Financial Services for more information.