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New to Merchant Cash Advances? Here’s Everything to Know

Merchant Cash Advance (MCA) is a loan alternative that allows you to get funding without getting approved for a conventional loan. If you’re money-hungry and need quick cash, an MCA may be the product for you.

For those new to the world of merchant cash advances, the following is a basic introduction to the funding product. 

Cash Advance: What is it? How Does it Work?

An MCA is not a loan. It is an advance on your future sales. 

A merchant cash advance is a type of funding where a merchant agrees to sell a portion of their future sales at a discount in exchange for quick funding. 

Businesses use this short-term funding to cover expenses or take advantage of opportunities. The funding is in the form of a lump sum and is repaid through a fixed percentage of oncoming credit card sales. 

How it works

MCA providers will typically advance an amount equivalent to a multiple of the business’s monthly credit card sales volume, ranging from 1.2 to 1.4. For example, if a company has monthly credit card sales of $10,000, the MCA provider may advance $12,000 to $14,000.

The funding is typically repaid through an agreed-upon percentage of the merchant’s daily or weekly credit card sales. 

Again, you will pay back the advance amount depending on your future sales. If your business has strong sales, repayments will be more than if you only have moderate sales or none at all.

The Charge APRs, not Interest

While merchant cash advance loans are a quick and easy way to get funding, they can be expensive. The average Annual Percentage Rate (APR) for a merchant cash advance loan is around 50%, which is much higher than most other types of loans. 

So how do merchant cash advance APRs work? 

MCA providers typically charge a high APR for their services. However, the actual APR you will pay depends on several factors, such as:

  • The amount of cash you borrow, 
  • The length of the repayment period, and 
  • The sales volume of your business. 

The higher the APR, the more expensive the loan. If you’re considering a merchant cash advance loan, shop around and compare APRs to find the best deal.


The biggest benefit of an MCA is that it is quick and easy to obtain – often in as little as 24 hours. It is also an excellent option for businesses with difficulty getting loans approved.