What is a Merchant Cash Advance?

Get a merchant cash advance based on your credit card sales.


Merchant Cash Advance Overview

Merchant cash advances (MCAs) are a lump sum of capital that is paid back with a small portion of your daily credit card sales. With a merchant cash advance, there is no due date to pay back the money and no fixed payment schedule. You pay more on days when your business does well and less on slow days. A lot of businesses like this flexibility, but MCAs can be expensive.

Businesses that receive payments via Square or PayPal may be able to get a less expensive MCA.

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How a Merchant Cash Advance Works

A merchant cash advance (also called a business cash advance) is an advance of capital based on your future credit card receivables. They can be a good financing option for restaurants, grocery stores, and other businesses that accept a large volume of credit card payments. MCAs are available to business owners with low credit scores, and they do not require collateral or a personal guarantee.

Once you get the advance, you pay it back each day with a small fixed percentage of your daily credit card sales. Since it’s a percentage, you pay more on days that you have a lot of sales and less when sales aren’t too strong. If you have no sales on a particular day, your payments resume on the next day that you have sales. Many business owners like MCAs precisely because of this flexibility. Instead of fixed monthly payments, they can repay the loan based on the daily ups and downs of their business. There’s no fixed maturity date--you simply keep making payments every day until the advance is paid back in full.

What you get in flexibility, however, you sacrifice in affordability. Merchant cash advances typically have high fees and deduct up to 25 % of your daily credit card sales, which can leave your business with very slim profit margins.

If you’re an online business that uses PayPal or Square, we can help you get a lower cost merchant cash advance. These companies offer more affordable MCAs for merchants that use their platforms to process credit card payments. They generally provide small advances between $4,000 and $15,000. If you don't use those payment processing companies, you can visit RapidAdvance.

Will I Qualify for a Merchant Cash Advance?

The qualification requirements for an MCA vary, but in general, here’s what you need:

small business loansProcess at least $2,000-2,500 in monthly credit card sales.

small business loansAt least 3-4 months in business.

small business loansSome providers require you to use a specific credit card processor

There may be other requirements, such as a minimum credit score, but that’s usually not very onerous (500+ credit scores are acceptable). Check your credit score for free here. If you want an MCA from PayPal or Square, you must process payments on these platforms for at least a few months and build up a good volume.

Cost of a Merchant Cash Advance

The downside to a merchant cash advance is the expense.

Your total cost depends on two things: the factor rate and the retrieval rate. The factor rate tells you the total amount of money you must pay back. For example, if you get a cash advance of $10,000 with a factor rate of 1.3, you must pay back $13,000 in total. The typical factor rate ranges from 1.13 to 1.42.

The retrieval rate is the share of credit card sales that’s deducted each day to pay back the advance. It ranges from approximately 5-25 %.

When you convert the cost of a merchant cash advance to an Annual Percentage Rate (APR), it can equate to anywhere from 30-130 % APR or more! Of course, this is a wide range, and your cost will depend on the specifics of your business. Businesses with a large and consistent volume of credit card sales tend to get the best rates.

You can get a lower cost MCA (15-35 % APR) if you use PayPal or Square.

The Details:

Maximum Loan Amount

Loan Term
No maturity date, but MCAs are typically paid back in 4-12 months.

Interest Rates
30-130 %

As fast as 1 business day

Down Payment
Not required.

Not required.

Personal Guarantee?
Not required.

Have a question?


small business loansFlexible repayment with no fixed maturity date or fixed payment schedule.

small business loans

Available for startups and business owners with low personal credit scores.

small business loans

A merchant cash advance is a quick way to obtain funding.

small business loans

No collateral or personal guarantee required.


Can be one of the most expensive types of business financing.

Only available for businesses that accept credit card payments.

May need to use a specific credit card processor.

How to Apply

Answer Simple Questions

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Get Funded in Record Time


Additional Resources

For a more in-depth explanation of MCAs, see our guide for small business owners.

Are you a startup looking for funding, but an MCA isn’t right for you? Read this article for other, less expensive options.

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