The Best Merchant Cash Advance for Small Business Owners

Updated on:
December 5, 2023

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Applying will not affect your credit score

In the realm of small business financing, merchant cash advances (MCAs) have emerged as a beacon of hope for business owners, especially for those grappling with imperfect credit. When funding options are limited due to poor credit, or you need funding quickly, an MCA is likely the right type of financing. If this is the case for you, keep reading.

What Is a Merchant Cash Advance (MCA)?

Merchant cash advances provide businesses with fast access to working capital based on future revenue. Unlike loan options, MCA companies offer a lump sum, which is then repaid through a share of future sales. This model makes MCAs an attractive option for businesses with fluctuating cash flow.

Benefits of MCA Over Loans

The flexibility and speed of MCAs stand in stark contrast to bank loans. They don’t require long-term commitments or rigid repayment terms. This is particularly beneficial for small businesses needing immediate funding without the burden of high credit score requirements.

Is a Merchant Cash Advance the same as a Business Cash Advance?

Simply yes. An MCA and a Business Cash Advance are the same solution for business funding.

How do Merchant Cash Advances Work?

  1. Application and Approval: The online application process for an MCA is generally straightforward and quick. A business applies for an MCA with a funder, providing necessary documentation such as business bank statements. The funder assesses the business’s sales and cash flow to determine eligibility and the amount of advance. Eligibility often hinges on factors like monthly revenue, business days in operation, and annual revenue rather than just a personal credit score.

  2. Receiving the Funds: Once approved, the business receives a lump sum of money. This amount is based on the business’s expected future revenue.

  3. Repayment Method: Instead of fixed monthly payments, repayments are made through a agreed upon share of the business’s revenue. This means the amount paid back each day varies with the business’s sales volume.

  4. Factor Rate and Fees: A key aspect of MCAs is the factor rate, which determines the total cost of the advance. Unlike interest rates in loans, factor rates are a straightforward multiplier applied to the advance amount, making it easier to understand the total repayment amount. The cost of an MCA is determined by a factor rate, typically ranging between 1.1 and 1.5. This rate, when multiplied by the advanced amount, gives the total amount to be repaid. For example, a $10,000 advance at a factor rate of 1.3 would require a total repayment of $13,000.

  5. Duration of Repayment: The duration of the MCA repayment* depends on the volume of revenue. Higher sales mean faster repayment, while lower sales extend the repayment period.

  6. Flexibility and Speed: MCAs offer flexibility in repayment and can be a quick way to access capital, often with funding available within a few days of approval.

Who are the Best Merchant Cash Advance Companies?

Some MCAs companies are more reputable than others. We strongly recommend looking at companies that have a long history of doing business. Both Reliant Funding and The LCF Group have been in business for 10+ years and have excellent online reviews.

What are the Qualification Requirements for an MCA?

Some MCAs companies are known for working with any type of business to provide short-term financing meaning as long as you can show 3-4 months of business bank account statements to showcase that you have receivables or revenue, you will likely be approved. Even your industry is flexible so if you run an ecommerce site or a cannabis dispensary, you can get approved. Funders like iCapital Funding and The LCF Group will work with businesses with imperfect credit so you

Are MCAs Short-Term Loans or a Business Line of Credit?

While they are usually short term (up to 12 months), MCAs are neither loans, not lines of credit. Instead, they are a form of alternative business financing that provides an advance against future sales. They are not backed by a bank or the SBA, but this also means that MCA providers can move much faster in funding small businesses – usually as little as the same business day.

In terms of funding amount, just like many banks, MCA providers are able to finance large sums, with some going up to $2M.

What Upfront Costs are Charged Including Administrative Fees and Origination Fees?

Fees vary from funder to funder. It’s best to look at your total cost to understand if there are any fees included.

Comparing Funders

Custom Solutions and Premier Service

The LCF Group shines in offering tailored solutions. Recognizing that every business has unique needs, LCF provides custom offers, ensuring that the advance amount and repayment terms align with the business’s cash flow. Their exceptional customer service ensures a smooth application process.

Catering to Businesses with Bad Credit

One of the most significant advantages of opting for The LCF Group is their focus on helping businesses with bad credit. They understand that a credit score doesn’t always reflect a business’s potential, offering an opportunity for those traditionally overlooked by funders.

Comparing MCAs and Other Financing Options

Speed and Flexibility

MCAs stand out for their fast funding – often within a single business days. This is a stark contrast to the lengthy processes associated with small business loans or lines of credit that can take weeks or months.

Customization for Small Businesses

MCAs are especially beneficial for small businesses that might not qualify for loans due to a minimum credit score requirement or lack of extensive bank statements. With MCAs, even startups and businesses with bad credit can find viable financing options.

How MCAs Can Enhance Your Business

Improving Cash Flow

By aligning repayment with daily sales, MCAs can help stabilize your cash flow. This is particularly valuable for businesses that experience seasonal fluctuations in sales.

Supporting Diverse Business Needs

Whether it’s for purchasing inventory, expanding operations, or managing unforeseen expenses, MCAs provide the working capital necessary to support various business needs.


In conclusion, merchant cash advances offer a compelling alternative to traditional financing methods, especially for small business owners facing credit challenges. We encourage you to review merchant cash advance providers to find the best funder for your needs.

*Repayment in this context describes the process of repurchasing a merchant cash advance. It does not describe the process of repaying a loan. MCAs are legally distinct from loan products.

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