What is a Merchant Cash Advance (MCA)?

What is a Merchant Cash Advance (MCA)?

Merchant cash advances provide small businesses with an alternative from traditional bank loans. Business owners receive funds as a lump sum upfront from a merchant cash advance provider and repay the advance with a percentage of the business’s sales

Merchant Cash Advance Details

  • Fast access to cash
  • Flexible repayment terms
  • Strong credit not required
  • You choose how to use
  • No collateral required
  • Very, very expensive (70% – 200% APR)
  • Minimum daily payment hurts cash flow
  • Doesn’t help build business credit
  • May lock-in merchant processor
  • Must accept credit cards

A merchant cash advance is not a business loan but should be considered a cash advance based on the volume of your credit card receipts.

When it comes to loan options, Square is pretty flexible, and the information required for your application is relatively limited

When it comes to loan options, Square is pretty flexible, and the information required for your application is relatively limited

As mentioned above, Square Capital is a little unpredictable when it comes to things like terms and fees, because your loan is based on your merchant account and your annual revenue.

However, if you’re lending between $500 and $250,000 from Square, you can expect to be asked to pay your money back within 18 months, and there won’t be any origination fees to worry about.

Instead, Square makes money from its business loans by asking you to pay a one-time fee called a “factor rate,” which you pay back gradually over the life of your loan.