Should I get a line of credit or a merchant cash advance?

If you qualify for a line of credit (typically 600+ FICO, 12+ months in business, $15k+/month deposits), it's almost always the better tool — revolving access, lower cost, only pay for what you draw. An MCA wins only when speed is critical or qualification gaps prevent line approval.

Qualification is most of the decision

The decision is mostly about qualification. If both products are available to you, the line of credit is structurally better: you only pay for what you draw, you keep capital available for future needs without a new application, and the all-in cost is meaningfully lower.

Side-by-side comparison

Side-by-side:

Cost — non-bank line: 15–60% APR; MCA: 30–110% effective APR
Structure — line: revolving, draw and repay; MCA: lump sum, daily/weekly repayment
Flexibility — line: pay interest only on what you draw; MCA: full payback owed regardless of cash-flow swings
Qualification — line: 600+ FICO, 12+ mo in business, $15k+/mo; MCA: 500+ FICO, 6+ mo, $10k+/mo
Speed — line: 1–7 business days; MCA: 24–48 hours

The right answer for borderline files

The 'right' answer for borderline files: try for the line first. Most broker-network applications check both products on a single soft pull, and a line approval is a meaningfully better outcome. If the line declines and capital is genuinely needed, the MCA is the fallback — but eyes-open on the cost differential.

If this fits your situation, apply with ClearValue Lending — your file routes to one matched lender.

Worked example — $40k need at the borderline file

An 18-month-old business with $18,000/month in deposits and 620 FICO needs $40,000 for working capital. Line-of-credit path: $50,000 limit at ~35% APR, draw $40,000, pay interest on what's drawn (~$1,170/month interest if held flat), redraw as the balance is paid down. MCA path: $40,000 at 1.34 factor over 9 months → $53,600 payback, ~$280/business-day ACH. Same need, ~$10k cost difference in the first 9 months — and the line stays available after the balance is paid.

Don't take an MCA without checking line eligibility

Many borrowers default to MCAs because they fund faster, only to find they would have qualified for a line of credit at a fraction of the cost. A single broker-network soft pull usually checks both — always check.

Key takeaways

Lines of credit are structurally better than MCAs when both are available — lower cost, revolving access, only pay for what you draw.
Typical line qualification: 600+ FICO, 12+ months in business, $15k+/month in deposits.
MCAs win on speed (24–48 hours) and accessibility (500+ FICO, 6+ months).
For borderline files, try the line first — a single application usually checks both products.
Educational ranges only — actual qualification depends on lender, file, and current market.
Related: Business Line of Credit Requirements | FICO 600–649 business line of credit options

Sources

Federal Reserve Small Business Credit Survey 2024 reports lines of credit and MCAs are the two most-applied-for non-bank SMB products, with line approval rates running 50-75% vs. MCA approval rates above 85% — driving the qualification-first decision framework. — Fed SBC Survey 2024
MCAs are structured as the purchase of future receivables (not loans) — which is the legal basis for their factor-rate pricing and why TILA APR-disclosure mandates don't apply. — CFPB Regulation Z