A merchant cash advance (MCA) is a form of business financing structured as a sale of future receivables — the funder advances capital upfront in exchange for a fixed daily or weekly draw from your business bank account until a contracted total payback is reached.
An MCA is generally structured as a purchase of future business receivables, not a loan. The funder advances a lump sum and, in exchange, takes a fixed daily or weekly debit from the borrower's business bank account (or a percentage of card sales) until a contracted payback amount is reached. Pricing uses a factor rate rather than an APR — see [[factor-rate]]. A 1.30 factor rate on a $50,000 advance means total payback of $65,000. The daily/weekly debit amount is set at funding based on the term length (typically 6-18 months) and remains fixed until payoff. MCAs are typically faster, more accessible, and more expensive than traditional bank financing. Common uses: working capital gaps, inventory purchases, payroll bridges, growth-mode cash flow when traditional financing isn't fast enough. Legal note: regulatory treatment of MCAs varies by state. New York, California, Utah, Virginia, and several other states have enacted commercial financing disclosure laws that require MCAs to disclose APR-equivalent or specific cost metrics. The 'MCA is not a loan' framing is jurisdictionally hedged.
MCAs are generally structured as sales of future receivables, not loans, in most state jurisdictions. However, several states (NY, CA, UT, VA) have enacted commercial financing disclosure laws that treat MCA economics similarly to loans for transparency purposes. The 'not a loan' framing is jurisdictionally hedged — read your specific state's regulatory treatment.
MCA approval and funding is among the fastest of any business financing product — typically 24-72 hours from application to funded. Faster than bank term loans (2-6 weeks) or SBA loans (30-90 days). Speed comes at a cost: factor-rate pricing is meaningfully higher than amortizing term-loan APRs.
MCA approval is primarily driven by business cash flow (deposits, deposit consistency) and time-in-business — not personal credit. Most MCA funders will approve 500+ FICO if the business shows $10K+/month in deposits with consistency. Some MCA products approve below 500 FICO at higher factor rates.