Key Takeaways
- Advance amounts: $25,000 – $2,000,000
- Factor rates: 1.15 – 1.45 (equivalent cost of capital explained below)
- Repayment: Automatic daily or weekly percentage of revenue
- Decision speed: As fast as 24 hours
- No collateral, no fixed monthly payments, no personal real estate liens
What Is a Merchant Cash Advance?
A merchant cash advance is not technically a loan — it is a purchase of future receivables. An MCA provider advances your business a lump sum of capital in exchange for an agreed-upon percentage of your future daily or weekly revenue until the total purchased amount is repaid. This distinction matters because it fundamentally changes how repayment works.
With a traditional loan, you owe a fixed amount on a fixed schedule regardless of how your business performs. With MCA funding, your repayment amount adjusts automatically based on your actual sales volume. A strong revenue week means higher payments and faster payoff. A slow week means lower payments and no penalty. The structure is inherently aligned with the rhythm of your business.
Bankable structures merchant cash advances for businesses that need capital quickly and prefer repayment flexibility over the rigid schedules of conventional lending. It is the fastest capital deployment method we offer — decisions in as little as 24 hours, funding within 48.
MCA Funding at a Glance
| Feature | Details |
|---|---|
| Advance Amounts | $25,000 – $2,000,000 |
| Factor Rate | 1.15 – 1.45 |
| Holdback Percentage | 5% – 20% of daily revenue |
| Repayment Method | Daily or weekly ACH from business account |
| Estimated Term | 4 – 18 months (varies with revenue) |
| Decision Speed | 24 hours |
| Funding Speed | 48 hours after approval |
How a Merchant Cash Advance Works
The Purchase Agreement
When you accept an MCA, you are selling a portion of your future revenue at a discount. Here is a concrete example: Bankable advances your business $200,000 at a factor rate of 1.30. Your total repayment obligation is $200,000 x 1.30 = $260,000. The holdback percentage is set at 10% of daily revenue. If your business generates $5,000 in revenue on a given day, $500 is automatically remitted toward the advance. On a $3,000 day, only $300 is collected.
Factor Rates vs. APR: Understanding the Real Cost
MCA funding uses factor rates rather than annual percentage rates (APR). A factor rate of 1.30 means you repay $1.30 for every $1.00 advanced. This is straightforward — but it is not directly comparable to a loan's APR, and understanding the distinction prevents costly misunderstandings.
The effective cost of an MCA depends on how quickly you repay. If you repay the $260,000 total in 6 months, the annualized cost is significantly higher than if repayment takes 14 months. This is why revenue-based advance products favor businesses with strong, consistent revenue — the faster your cash flow retires the advance, the sooner you are free of the obligation.
Bankable's advisory team provides a complete cost comparison against alternative products before you commit. In many cases, the speed and flexibility of an MCA justifies its premium over slower, lower-cost alternatives. In other cases, a working capital loan or line of credit may deliver better economics. We present both options and let you decide.
The Repayment Structure
Repayment occurs through one of two mechanisms:
- Split withholding: A percentage of your daily credit card and debit card sales is automatically diverted to the MCA provider before funds settle to your account. This is the original MCA model and works best for businesses with high card transaction volume (restaurants, retail, ecommerce).
- ACH withholding: A fixed percentage of your total daily bank deposits is debited via ACH. This model works for all business types, including those with primarily cash, check, or invoice-based revenue. Bankable primarily uses this structure for its flexibility.
Who Qualifies for MCA Funding?
- Minimum 4 months in business
- Monthly revenue of $10,000 or more
- Active business bank account with consistent deposits
- No minimum credit score requirement (all scores considered)
- No collateral required
- All business structures accepted (LLC, corporation, sole proprietorship)
- All visa types and non-citizen business owners welcome
The qualification criteria for a merchant cash advance are deliberately accessible. Because the advance is secured against future revenue rather than assets or credit history, the primary underwriting question is: does this business generate consistent revenue? If the answer is yes, the path to funding is short.
When an MCA Makes Strategic Sense
Speed Is the Priority
When a time-sensitive opportunity or operational emergency demands capital within days — not weeks — an MCA delivers. A competitor's inventory at liquidation prices. A key piece of equipment that failed. A contract that requires upfront materials. The 24-hour decision and 48-hour funding timeline exists precisely for these moments.
Revenue Is Strong but Credit Is Not
Traditional lenders evaluate creditworthiness through the lens of personal credit scores. An MCA evaluates the business itself — its revenue volume, deposit consistency, and operational activity. Businesses with credit scores below 600 regularly access MCA funding that banks would never approve. For a deeper look at this dynamic, see our guide on business loans for bad credit.
Flexible Repayment Matters
Seasonal businesses, businesses with variable revenue cycles, and growth-stage companies benefit from repayment that moves with their cash flow. There is no risk of missing a fixed monthly payment during a slow period because there are no fixed monthly payments.
When an MCA May Not Be the Best Fit
If your business can wait 2-4 weeks for funding and qualifies for conventional lending, a SBA 7(a) loan or working capital loan will typically offer a lower total cost of capital. MCAs are priced for speed and accessibility — businesses that do not need those advantages may find better economics elsewhere. Bankable will always recommend the most cost-effective structure for your situation.
MCA vs. Traditional Loan Comparison
| Factor | Merchant Cash Advance | Working Capital Loan | SBA 7(a) Loan |
|---|---|---|---|
| Speed | 24-hour decision | 48-hour decision | 30–60 days |
| Repayment | % of daily revenue | Fixed schedule | Fixed monthly |
| Credit Minimum | None | 550+ | 680+ |
| Collateral | None | None under $250K | Over $500K |
| Cost | Higher (factor rate) | Moderate | Lowest |
| Best For | Speed, flexibility, low credit | Operational needs | Long-term investment |
Other Capital Products
Working Capital Loans
Working capital from $50K to $5M with 48-hour decisions. Fixed repayment schedules for predictable operational budgeting...
Explore →Revenue-Based Financing
Revenue-based funding with repayment tied to monthly revenue. No equity dilution, no fixed payments, growth-aligned terms...
Explore →SBA 7(a) Loans
Government-backed loans up to $5M with the lowest rates in business lending. Ideal for long-term capital deployment...
Explore →Frequently Asked Questions
No. A merchant cash advance is technically a purchase of future receivables, not a loan. This distinction has practical implications: MCAs are not subject to usury laws or traditional lending regulations, repayment is variable rather than fixed, and the product does not appear as debt on your balance sheet in the same way a loan does. However, it functions similarly to a loan in that you receive capital upfront and repay it over time with a cost of capital applied.
A factor rate is a multiplier applied to your advance amount to determine total repayment. Multiply your advance by the factor rate: $100,000 advance x 1.25 factor rate = $125,000 total repayment. Factor rates for MCA funding typically range from 1.15 to 1.45 depending on your risk profile, revenue consistency, and time in business. Lower factor rates correspond to stronger bankability profiles.
Yes. Merchant cash advances have no minimum credit score requirement. Approval is based primarily on your business revenue and deposit history. Businesses with credit scores below 500 regularly qualify for MCA funding through Bankable. Your Bankability Score provides a comprehensive assessment that weighs revenue strength, business maturity, and cash flow patterns alongside credit history.
The holdback percentage — the portion of daily revenue applied to repayment — typically ranges from 5% to 20%, with most Bankable MCA structures falling between 8% and 15%. This percentage is fixed at the time of the advance and does not change. What changes is the dollar amount: on high-revenue days you repay more, on low-revenue days you repay less. This protects your cash flow during slower periods.
Yes, and in most cases there is no prepayment penalty. However, unlike a traditional loan where early payoff reduces total interest, MCA factor rates are typically applied to the full advance amount regardless of payoff timing. Some Bankable MCA partners do offer early payoff discounts — your advisor will confirm whether a discount applies to your specific offer before you sign.