The Ultimate Guide Defining Merchant Cash Advance from A to Z

A cash advance is an easy way out in a financial crisis. Merchant Services in the USA suggest that to avoid unpleasant surprises, it’s better to familiarize yourself with cash advance’s terms and clauses.

This guide will cover all the details regarding merchant cash advance, how it is different from traditional commercial loans for business, its pros, and cons, and how you can apply for one yourself.


What is a Cash Advance?

You must have had a thought of what would happen if you run out of finances for your business? Well, the first idea is to get a business loan from a bank.

In case you haven’t read about it anywhere, a cash advance is much better than a commercial business loan from a bank.

A cash advance is a fast-financial injection that can help you fight crucial budget constraints. It helps small and medium businesses gear up against a financial crisis. Online merchant services offer a myriad of funding options within which merchant cash advance and platform are the two most popular and advantageous options.

With a merchant cash advance, you get upfront cash and take payments via credit card as per the agreed amount. You might have had a call from merchant services in the USA to apply for a merchant account online if you are doing business for more than a year.

How is Merchant Cash Account Different than Business Loan

How is Merchant Cash Account Different than Business Loan?

In a business loan, a bank offers upfront cash which is paid back in monthly payments. These payments are often conducted directly from your operations account irrespective of the fact that you can afford to repay the installment or not.

The following are the 5 differences between merchant cash advance and business loans.

1. Approval Process

AMCAis said to be approved if you only show the history of credit card receipts to repay the money. This also makes them attractive to companies who have a bad credit history.

2. Lending Structure

A merchant cash advance isn’t regulated or watched as rigorously as compared to a business loan from banks. However, this doesn’t mean that you ignore all the clauses in contracts.

3. Payment Process

Merchant cash advance takes a certain percentage of your revenue monthly/daily/weekly (depends on what you agreed upon in negotiations). Business loans, on the contrary, deduct repayment from the existing business account; the catch here is that with MCA, you can repay from the earned finances. Also, cash advance companies in Houston offer relaxed repayment procedures which help business sustain stability.

4. Funding Speed

Merchant cash advances work just like online lenders; they offer you quick funding, which supports the company’s finances in crucial times.With MCA, it usually takes a week or two to deliver upfront cash to the business; alternatively, business loans have lengthy paperwork and slow transfer of funds.

5. Interest Rate/ Factor rate

MCA typically never publish their interest rates; however, they typically range between 1.2 to 1.4 percent as per the risk assessment. Traditional bank loans, on the contrary, advertise their interest rates and ten to keep it at a minimum.

Traditional bank loans, on the contrary, advertise their interest rates and ten to keep it at a minimum

Pros and Cons of Credit Cash Advance


  • Get quick cash
  • Little paperwork
  • Repayment isn’t fixed monthly
  • High approval possibility
  • No collateral needed
  • Perfect credit isn’t required



  • Higher interest rate
  • A wide fragment is still unregulated


Where Can I Use Merchant Cash Advance

You can use MCA for a variety of reason, including:


  • You have started a new business, and you won’t qualify for traditional loans
  • You are seeking short-term financial aid
  • You do not have much to offer as a collateral
  • You need flexible payment procedure
  • Our credit rating is low and won’t qualify for a traditional loan

If you have decided that MCA is the right fit to finance your small business, its time to apply for one.

How to get Merchant Cash Advance

How to get Merchant Cash Advance?

Applying for a merchant cash advance is a simple process where you file an application and go through some paperwork.

The idea is to give borrowers easy cash upfront with little or no hoops to jump. The following are the three steps to apply for a merchant cash advance.


1. Arrange Qualified Credit Card Processor

MCA is based on the ability to repay the amount you borrow, so funding companies require to have an account with the credit card processor, which is contracted with the merchant cash advance company.


2. Fill and Submit Your Application

As compared to a traditional loan, filling an application for MCA is quite simple. You will be asked some questions about your company, like how much income you generate and what is the average credit card sales of your business. While MCA is not applicable for funding startups, however, small businesses can make the most out of this quick financial injection.


3. Thoroughly read and Submit Your application

This is one of the most crucial parts of the contact. Make sure you read the clauses and the terms thoroughly so that you understand what you agree to.

What Is TheCost of Cash Advance

What Is TheCost of Cash Advance?

Cash advance has numerous fees, before you jump and apply for a merchant cash advance, here is what you should know.

A $700 cash advance can cost you:

Cash advance withdrawal $700
Monthly payment $50
Cash advance fee $25
ATM charges $2.50
Estimated time to repay 12 Months
Total fees with interest $795.50


If you think the interest factor isn’t feasible, then you can try other options instead of going for a high-risk merchant account.


Alternatives to Cash Advances

If you find yourself facing a cash crisis and do not want to end up getting a merchant cash advance, then the following three alternatives are for you:

1. Overdrawing your account

Instead of going for a cash advance, try overdrawing your account with a debit card, you will face a fee but would not have to worry about the loan interest.

2. A Personal Loan

Although this will be an expensive alternative, but will still be an option if your credit isn’t great.

3. Borrowing money

You can ask tour friends or family to help you with their savings.

Merchant cash advance has helped many small and medium businesses in crucial situations; your success with this mode of financial injection depends on your utilization of finances and budget.

Thinking of getting one for yourself or to give your business the financial push it so deserves right now? Well, contact one of our live chat representatives, and we`ll help you set a cash advance right away!

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