What Is a Merchant Cash Advance (MCA)?

An MCA is sales-based financing. You receive a lump sum now, then remit a contracted share of your future card sales (plus a fixed fee) through daily or weekly deductions until the agreed payback is met. It’s not a traditional loan with interest—it’s a purchase of receivables with remits tied to revenue.

Why MCAs Became a Go-To Funding Source After COVID

Speed & simplicity: streamlined docs and funding in days when banks slowed.
Revenue-aligned repayments: remits scale with card sales; slower months pay less.
Underwriting flexibility: strong card volume can offset thinner financials.
Short-term use cases: fast inventory flips, emergency repairs, time-sensitive gaps.

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Reality check: MCAs price via factor rates, not APR. Effective cost can be high—especially with daily/weekly remits. Always compare equipment loans, term loans, and lines of credit.

Who Uses MCAs Most?

Highest fit among card-revenue, fast-turnover businesses:

Industry	Why MCAs Fit	Typical Use
Restaurants / Bars	High card mix, daily sales, frequent inventory cycles	Inventory buys, equipment repairs, short-gap payroll
Retail (Brick & Click)	Card-heavy sales, promotional inventory turns	Seasonal stock, marketing pushes, cash-flow smoothing
Personal & Field Services	Readers on-site, variable weekly demand	Emergency fixes, bridging receivables

How MCA Pricing Works (Plain English)

MCAs quote a factor rate (e.g., 1.35) on the funded amount, not an interest rate. If you receive $100,000 at 1.35, your total payback is $135,000. Remits are a % of daily/weekly card sales (or fixed debits). The faster you repay, the higher the implied APR appears, because the fee is fixed regardless of time.

Scenario	Advance	Factor / Payback	Estimated Duration	Implied APR (rough)
Base MCA	$100,000	1.35 / $135,000	9–12 months	~35–55%+*
Faster sales (repay quicker)	$100,000	1.35 / $135,000	6–7 months	Often higher (fee fixed)
Slower sales (longer)	$100,000	1.35 / $135,000	12–15+ months	Lower, but cash drain lasts

*Illustrative only. Actual cost varies by remit %, sales speed, fees, and true cash-flow timing.

Pros & Cons

Pros

Fast approvals & funding
Remits tied to % of sales
Light collateral; flexible underwriting
Useful for short, ROI-positive needs

Cons

High effective cost (factor ≠ APR)
Daily/weekly remits can strain cash flow
Stacking advances multiplies risk
Poor fit for long-life assets

When to Use (and Avoid) an MCA

Smart Use	Avoid / Consider Alternatives
Short-term inventory that clearly flips fast	Buying equipment/vehicles → equipment loans/leases
Emergency repairs preventing downtime	Covering chronic operating losses
Marketing with proven 3–6 month payback	Stacking multiple MCAs (cash-flow spiral risk)
Bridge to bank/SBA or seasonal cash gap	Long-term needs better served by term loan/LOC

Run the Numbers Explore MCA Options

Lower-Cost Alternatives to Compare

Equipment Loans/Leases: asset-secured, longer terms, lower rates; match payments to useful life.
Business Line of Credit: revolving; interest only on what you draw; ideal for working capital.
Term Loans: predictable payments for projects with clear payback windows.
Unsecured Business Loans: speed without MCA mechanics for credit-strong owners.

Start Application Compare Unsecured Options See Term Loans

Merchant Cash Advance FAQs: Everything You Need to Know

What is a Merchant Cash Advance?

A merchant cash advance is a type of financing where a business receives a lump sum upfront in exchange for a percentage of future credit and debit card sales. Repayment amounts flex with revenue.

How Does a Merchant Cash Advance Work?

After approval, you receive a cash advance which you repay through a portion of your daily card receipts until the total agreed-upon amount (advance + fees) is paid. Slower periods mean lower remits.

What Are the Advantages?

Fast approval & funding (days)
No collateral required
Payments adjust with sales volume
Approval focuses more on sales history

What Are the Potential Drawbacks?

Higher costs (factor-rate pricing often exceeds loan APRs)
Short repayment terms with frequent remits
Cash-flow impact if sales dip

Who is Eligible?

Businesses with consistent card transactions—restaurants, retail, personal services—tend to qualify. Eligibility depends more on sales volume and stability than personal credit alone.

How to Apply with Liberty Capital Group?

You can begin online and our team will guide you step-by-step. Visit our dedicated MCA service page or use the application form below.

Are There Alternatives?

Traditional Bank Loans
Business Lines of Credit
Invoice Financing
SBA Loans

For broader funding insights, see Business Financing Options and the SBA.

Post-COVID Snapshot

Usage	Demand rose as banks tightened.
Sectors	Restaurants, retail & services show highest fit.
Costs	Factor-rate pricing can imply high APRs.
Cash-Flow	Daily/weekly remits increase strain in slow weeks.

See MCA Options

Fast Checklist

3–6 months recent bank statements
Card processing statements (if %-of-sales remit)
Government ID & entity docs
List of current obligations (avoid stacking)
Clear use of funds with near-term ROI

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Compare Side-by-Side

Product	Speed	Cost	Best For
MCA	Fastest	Highest	Short-term, card-driven needs
Equipment Loan/Lease	Fast	Lower	Tools/vehicles with long life
Business LOC	Moderate	Lower–Medium	Flexible working capital
Term Loan	Moderate	Medium	Predictable project financing

Start Application Get a Quote

Apply or Request a Custom Quote

No cost to apply. We’ll show MCA vs. lower-cost options side-by-side.

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Everything You Need to Know About Merchant Cash Advance – FAQ’s

Merchant Cash Advance (MCA): The Post-COVID Guide to Using It Safely