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What is a Merchant Cash Advance?

Updated: Feb 12

A merchant cash advance (MCA) is a lump-sum loan that a business or merchant repays by automatically drawing on a percentage of future debit and credit card transactions. Typically, cash advance loans have a shorter repayment period compared with other business financing options, as well as smaller and more frequent payments.

While cash advance loans are useful as a quick funding solution, they are normally reserved as a fallback plan if a business faces a tough financial situation without any alternative method of obtaining money. The reason small business cash advances are treated as a last-case-scenario is that the interest rates are notably higher than other types of business loans.

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