Why would I want a merchant cash advance vs., a small business loan?

Updated: Mar 23, 2021

Merchant cash advances or MCA are most often used by merchants that don't qualify for a regular business loan or bank loan. Merchant Cash Advance or MCA are generally more expensive than bank loans, but they are much, much easier, to qualify for. 

The competition in the MCA space and in addition innovation have led to downward pressure on rates or the cost of the money and the length or terms of an MCA are now more closely correlated with an applicant's over all industry score (much like a FICO Score). Small businesses/merchants take out loans and or cash advances when they believe that the opportunities offered by expanded financial assets will outweigh the costs.

Small businesses owners that don’t have the working capital on hand to fund expansion by themselves may rely on external funding, such as an MCA, merchant cash advance. The advantages are faster approvals, funding within 1-2 days, minimal documentation and the fact that bad credit will not cause a business owner to be turned down.

These are short repayment terms that could be from 7 up to 36 months. Mom and Pop Business Funding offers daily, weekly, twice a month or monthly payments. Midsize or small business owners who cannot qualify for traditional business bank loans have the ability to secure a Merchant Cash Advance or MCA.

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