What Is a Merchant Cash Advance—and Is It Right for You?

A merchant cash advance (MCA) is a fast and flexible funding option designed for small and medium-sized businesses. But is it the right solution for your company? Let’s take a closer look at how it works, and when it makes sense to use one.

What Is a Merchant Cash Advance?

Unlike a traditional loan with fixed payments, an MCA is an advance on your future sales—usually credit card or daily revenues. You receive a lump sum upfront and repay it through a percentage of your daily sales until the full amount, including fees, is paid back.

How It Works

• You apply and, if approved, receive funds within a few days.
• A fixed percentage of your daily credit card sales is automatically deducted for repayment.
• This continues until the total amount (advance + fees) is fully repaid.

Benefits of a Merchant Cash Advance

• Quick access to capital: Funds are often available within 24–72 hours.
• Flexible repayment: Payments adjust with your sales volume.
• Low credit requirements: Lenders prioritize sales history over credit scores.

Drawbacks to Consider

• Higher costs: MCAs often use a factor rate (e.g., 1.2–1.5), resulting in high effective APRs.
• Cash flow strain: Repayments based on sales can create pressure if revenue drops.
• Not ideal for long-term funding: A term loan or line of credit may be better for larger or ongoing needs.

When Is an MCA a Good Fit?

• Your business needs cash urgently for inventory, equipment, or operating costs.
• You have reliable daily or credit card sales.
• You prefer repayment to fluctuate with revenue.

When to Think Twice

• Your revenue is seasonal or inconsistent.
• You’re concerned about high interest or fees.
• You need funding for long-term projects or growth.

How the Process Works

• Apply: Submit basic business details, sales history, and revenue information.
• Approval & Funding: Get approved and receive funds—usually within days.
• Repayment: A set percentage of your daily revenue is automatically deducted until the total is paid off.

Who Typically Uses an MCA?

• Businesses with consistent daily or credit card sales.
• Owners who need funds fast—within a few days.
• Companies that may not qualify for traditional loans due to lower credit scores.
• Businesses with short-term funding needs.

Is This Your Best Option?

Ask yourself:

• Do I need immediate cash for a business expense?
• Does my business generate steady credit card revenue?
• Can I handle variable repayment amounts?
• Am I comfortable with the higher cost of an MCA?
• Is this for a short-term need—not long-term growth?

If most of your answers are “yes,” an MCA could be a solid option. If not, consider exploring lines of credit, term loans, or SBA funding instead.

Final Thoughts

A merchant cash advance gives you quick access to funds with flexible, sales-based repayment. It’s best suited for short-term needs and businesses with steady revenue—but it comes at a cost. Be sure to understand the repayment terms and compare other financing options before committing.

Ready to Move Forward?

If your business needs fast capital and you’re generating steady sales, Swish Funding can help. Contact us today to find the right solution for your business.