Merchant Cash Advances: Where to Apply & How They Work

Merchant cash advances (MCAs) can be a quick and easy way to get your hands on fast cash for your business. These advances come with very flexible repayment plans, but they can be much more expensive than business loans due to higher rates and fees. Learn more about how MCAs work, including where you can apply, pros and cons, and what you need to do to qualify.

Companies that offer merchant cash advances

These lenders offer a variety of business financing options, including MCAs. Factor rates are around 1.10 to 1.50.

Lender	Factor rate (approx.)	Loan amount
	1.09 – 1.35	$10,000 – $500,000	Go to site
	1.10 – 1.50	$10,000 – $1,000,000	Go to site
	1.13 – 1.28+	$5,000 – $800,000	Go to site

Need more options? We’ve searched the market for additional relevant MCAs.

Compare more MCAs

How do merchant cash advances work?

A merchant cash advance lets you borrow money quickly in exchange for a slice of your future sales. It is not a traditional loan. Instead, a funding company buys your future credit card sales at a discount. The company looks at your past sales data to decide how much cash to give you. Then, they add a fee called a “factor rate” to determine your total payback amount.

Example: Receiving a $100,000 advance

For example, let’s say you get a $100,000 advance with a 1.30 factor rate. This multiplier means your total payback amount is $130,000. You agree to pay this back by giving the company 20% of your daily credit card sales.

If you have a busy Monday and bring in $2,500 in card sales, the funding company automatically takes $500 from your account the very next day. If Tuesday is slower and you only make $1,000, they take $200. This automatic daily deduction happens every single business day until you completely clear the $130,000 debt.

What is the factor rate for MCAs?

The factor rate usually ranges from 1.10 to 1.50. This is an incredibly high-risk, expensive financial product. Because the lender automatically takes a percentage of your daily sales until you are paid up, this can severely drain your daily cash flow and leave you struggling to pay regular bills like payroll or rent.

How to calculate the total repayment

You can calculate how much you’ll pay back in total by multiplying the amount you’re borrowing by the factor rate. For example, if you receive a $50,000 advance with a factor rate of 1.20, your formula looks like this: $50,000 x 1.20 = $60,000.

You will owe a total of $60,000. The $10,000 difference is the flat fee you pay for the capital.

How is a merchant cash advance different from a business loan?

Merchant cash advances are different from business loans in a number of ways. MCAs are guaranteed by your credit card sales, requiring no collateral, and they’re easier to qualify for. You can get an MCA within 24 hours, which is faster than a traditional bank business loan.

Despite their advantages, MCAs typically come with much higher rates and fees. You may end up paying hundreds or thousands more in cash advance fees over the course of your term. This is because rates and fees aren’t regulated like they are for traditional business loans.

Advantages and disadvantages of merchant cash advances

Advantages

• Quick approval. Get your cash within 24 hours.
• Accepts bad credit. Having a low credit score typically isn’t a problem since the money is paid back as a percentage of credit card sales.
• No collateral required. You won’t need to secure the advance with assets because it’s covered by your future cash flow.
• High borrowing limits. You may be able to borrow anything from a few thousand dollars to over $1 million, depending on your lender.
• Flexible payment amounts. Payments are based on a flat percentage of your credit card sales, so the amount you pay will be lower when you sell less.
• Easy application. You can complete the application online and easily upload any supporting documentation that’s required.

Disadvantages

• Higher rates. You’ll often end up paying much higher rates and fees than you would with a traditional loan.
• Less cash flow. A percentage of the money you make will be redirected to pay off your cash advance.

Can my business qualify for a merchant cash advance?

There are a few things that lenders might look for to determine whether you can qualify for a merchant cash advance.

• Business status. Your lender will want to make sure that your business is licensed to operate in Canada.
• Length of operations. Your business needs to be operating for at least 3 to 12 months.
• Monthly revenues. You may be required to make sales above a certain threshold each month to qualify.
• Proof of transactions. Many lenders will want you to show that you’ve been processing credit card payments for at least a couple of months before they’ll approve you.
• Amount of advance. The amount you’re looking to borrow will determine your eligibility to apply with certain lenders.
• No bankruptcies. You can’t have any active bankruptcies.

What are my alternative options?

If you don’t think you’ll qualify for a merchant cash advance, you have other options.

• Bad credit business loan. You may be able to apply for a bad credit business loan even if your credit score is low. You’ll need to supply documentation about your debt and income though.
• Secured loan. It could be possible to get approved for a loan quickly if you secure your payments against the title of your vehicle or the equity in your home.
• Guarantor loan. It’s likely that you’ll be approved much faster if you can ask family or friends with good credit to cosign your loan.
• Low-interest credit card. You may be able to pay for business expenses on a low-interest credit card (which you can pay off when your sales pick up).
• Line of credit. You can look into a business line of credit to make sure you have cash on hand in case of an emergency.

Compare more companies that offer merchant cash advances

We searched the Canadian marketplace for merchant cash advance providers and organized them in the table below. Expect the factor rate for these providers to be around 1.10 to 1.50.

4 of 6 results

Finder Score	APR	Loan Amount	Loan Term
8.6 Great Journey Capital Business Loan	8.6 Great	8% – 29%	$10,000 – $500,000	4 – 24 months	To be eligible, you must have been in business for at least 6 months with a minimum $120,000 in annual revenue.	Go to siteView details Compare product selection Compare	loading
8.1 Great Advance Funds Network Business Loan	8.1 Great	Starting at 8.00%	$10,000 – $1,000,000	3 – 24 months	To be eligible, you must have been in business for at least 6 months, have a minimum annual revenue of $240,000 and a minimum credit score of 500.	Go to siteView details Compare product selection Compare	loading
7.9 Great Merchant Growth Business Loan	7.9 Great	12.99% – 39.99%	$5,000 – $800,000	6 – 24 months	To be eligible, you must have been in business for at least 6 months and have a minimum of $120,000 in annual revenue.	Go to siteView details Compare product selection Compare	loading
8.2 Great Driven Business Loan	8.2 Great	Undisclosed	$10,000 - $500,000	3 - 24 months	To be eligible, you must have been in business for at least 6 months and have a minimum of $84,000 in annual revenue.	View details Compare product selection Compare	loading

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Showing 4 of 6 results

Finder Score for business loans

To make comparing even easier, we came up with the Finder Score. Interest rates, fees and features across 10+ business loans are all weighted and scaled to produce a score out of 10. The higher the score the better the loan—simple.

Read the full methodology

Bottom line

If you need to get your hands on quick cash to fund your business expenses, an MCA might be a suitable option. This type of advance takes a percentage of the credit card sales from your business to pay back the loan. Learn more about what you’ll need to qualify for an MCA as well as what things you should consider before you take the plunge.

Frequently asked questions

• What documents and information will I need to take out an MCA?

  You will have to provide your personal details (like full name, email, phone number and date of birth). You’ll also need to provide your banking information, along with your business number and historical data for your credit card sales.

• Can I qualify for an MCA with bad credit?

  Yes. Most lenders rely on your sales history and business growth to determine your eligibility for an MCA rather than your personal credit score.

Written by

Leanne Escobal

Senior Publisher

Leanne Escobal is a senior publisher at Finder with more than 13 years of experience in financial products and services, with a focus on content strategy and marketing. She has completed the Canadian Securities Course (CSC®) as well as the Personal Lending and Mortgages course through the Canadian Securities Institute. Leanne holds a Bachelor of Arts (Honours) in English literature and creative writing from Western University. See full bio

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Leanne has written 190 Finder guides across topics including:

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Co-written by

Claire Horwood

Associate editor

Claire Horwood was a writer at Finder, specializing in credit cards, loans and other financial products. She has a Bachelor of Arts in Gender Studies from the University of Victoria, and an Associate’s Degree in Science from Camosun College. Much of Claire’s coursework has focused on writing and statistics, with a healthy dose of social and cultural analysis mixed in for good measure. In her spare time, Claire enjoys rock climbing, travelling and drinking inordinate amounts of coffee. See full bio

Claire's expertise

Claire has written 332 Finder guides across topics including:

• Banking
• Personal Loans
• Car Loans
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• Credit Cards