What is a merchant cash advance?

An MCA is structured as a purchase of future receivables rather than a traditional loan, and its cost is generally expressed through a factor rate rather than an interest rate.

How does it work?

You agree to sell a specific dollar amount of your future receivables, the purchased amount, for a smaller sum paid to you today, the purchase price. The difference between the two is the cost of the advance, expressed as a factor rate rather than an interest rate.

For example, if the purchase price is $50,000 with a factor rate of 1.30, the Total Purchased Amount would be $65,000.

Unlike interest that accrues over time, the purchased amount is established in the agreement. Any early-remittance or prepayment terms will be disclosed in your agreement and applicable disclosures.

The estimated remittance period may vary based on the structure of the agreement and the business's receivables.

How are payments handled?

Remittances are generally collected by ACH debit from your business bank account daily or weekly. The remittance amount, frequency, Total Purchased Amount, and other applicable terms are set out in your agreement before you sign.

See the rules that apply in your state.

How do I apply?

Complete the online application and provide four months of business bank statements. Our underwriting team reviews your business and presents the funding options available to you. If you accept, you sign electronically and funds are sent directly to your business account.

For a side-by-side view of how this compares to bank financing, see MCA vs. business loan. For the process end to end, see how it works.