How it works
A merchant cash advance, explained plainly.
It is not a loan. It is the sale of a portion of your business's future receivables in exchange for working capital today.
What a merchant cash advance is
With a merchant cash advance (MCA), a funding provider purchases a specific amount of your business's future receivables, such as card sales or deposits, for a lower upfront price. You receive that price as working capital.
The provider then collects the purchased amount by taking an agreed share of your receivables, often through scheduled remittances from your business bank account, until the full purchased amount is delivered.
How remittances relate to your sales
Because the provider bought a share of future sales, remittances are tied to your revenue. Many agreements include a reconciliation right: if your sales fall, you can ask to have remittances adjusted to reflect actual receipts. Review how your specific agreement handles this before you sign.
How it differs from a loan
- It is a purchase of receivables, not a loan, and there is no interest rate.
- Cost is usually expressed as the difference between the purchase price you receive and the receivables you sell.
- Remittances are tied to receipts rather than a fixed loan repayment schedule.
- It is available for commercial purposes only.
Read this first
What to know before you apply
- Understand the total cost. Compare the amount you receive with the total amount of receivables you are selling. Ask us to walk through it.
- Read the disclosures. In some states, providers must give a written disclosure of costs and terms before you sign. Read it closely.
- Know the remittance schedule. Confirm how often remittances are taken and whether a reconciliation process is available if sales change.
- Check your existing obligations. Taking more than one advance at a time can strain cash flow. Tell us about any current advances.
- Plan the use of funds. Working capital works best for needs that help generate revenue, such as inventory, staffing, or equipment.
- Ask about early delivery. Ask whether any discount applies if the purchased amount is delivered early. Terms vary.
- Get advice if unsure. Consider speaking with your accountant or attorney before signing any agreement.
Approval is not guaranteed
All funding is subject to underwriting and approval by the funding provider. Terms vary based on the business, its revenue, and other factors.