A Merchant Cash Advance (MCA) is not a loan. That’s not marketing spin—it’s a legal and structural distinction that matters.
An MCA is an advance against future sales, typically repaid through a daily or weekly percentage of revenue, often pulled directly from card or bank deposits.
How an MCA Works (Step-by-Step)
- A business receives a lump-sum advance (e.g., $100,000)
- The MCA provider purchases a fixed amount of future receivables (e.g., $130,000)
- Repayment happens automatically as revenue comes in
- Payments fluctuate with sales volume (usually)
There’s no fixed term, no interest rate, and no amortization schedule—just a factor rate and cash flow.
Key MCA Features
- Approval in days, sometimes hours
- Minimal documentation
- Based on revenue, not credit scores
- No collateral in the traditional sense
Translation: speed over cost, flexibility over structure.
If banks are the slow, polite gatekeepers of capital, MCAs are the blunt instrument you reach for when timing matters more than elegance.