What is a merchant cash advance?
A merchant cash advance is a purchase of your future credit card sales or receivables in exchange for an upfront lump sum, repaid via a percentage of daily sales or fixed daily payments until the agreed total is repaid.
How are MCA rates calculated?
MCA rates are typically presented as a factor rate (e.g., 1.2). Multiply the advance by the factor rate to find total repayment. The effective APR varies with repayment speed and can be much higher than bank loans.
What are the common merchant cash advance requirements?
Most MCA providers require 6–12 months in business, recent merchant processor statements or bank statements, proof of business ownership, and sometimes a personal guarantee.
Are daily payments common with MCAs?
Yes. Many MCAs use a daily remittance model where the lender collects a set percentage of each day’s card sales—this is often called daily payments MCA.
How do I calculate my daily payment and repayment time?
Use a merchant cash advance calculator: estimate daily payment = average daily card sales × holdback percentage. Days to repay ≈ total payback ÷ daily payment.
Is a merchant cash advance a good alternative to business loans?
It can be when speed and flexible qualification matter more than cost. For long-term financing or lower rates, traditional bank or SBA loans are usually better.
How can I compare MCA offers safely?
Compare total payback and use a merchant cash advance calculator to estimate daily/weekly impact. Ask for a written schedule, check for hidden fees, and verify lender reputation.
