Funding option

Merchant Cash Advance (Revenue-Based Advance)

Q: "Is a merchant cash advance a loan?"

"Legally no. You sell a portion of future receivables at a discount. That is why it is quoted as a factor rate instead of an APR and why credit matters less than deposits. Some states (California, New York, Utah, Virginia and others) now require APR-style disclosures on these contracts anyway."

Q: "What credit score do I need?"

"Many funders approve 500+ if monthly deposits are consistent and there are no recent defaults. Above 650 gets you meaningfully better factor rates."

Q: "Can I pay it off early to save money?"

"Only if the contract has an early-payoff discount. Most do not by default; ask for one before you sign. Without it, paying early just raises your effective APR."

Fast capital based on your monthly deposits, repaid as a fixed slice of daily or weekly revenue. The fastest money in small business, and the most expensive if you use it wrong.

Updated September 2026. Details vary by lender and change often; confirm terms with the provider.

How it works

A funder gives you a lump sum today. You repay a fixed total, the amount multiplied by a factor rate (typically 1.15 to 1.49), through automatic daily or weekly debits from your business bank account, or a percentage of card sales. There is no interest rate and no fixed term; the payback period is whatever it takes your revenue to cover the total.

	Typical range
Amount	$5,000 – $500,000 (usually 50–150% of one month’s deposits)
Factor rate	1.15 – 1.49
Time to fund	Same day to 3 business days
Payback	3 – 18 months, daily or weekly ACH
Minimums	6+ months in business, $10k+/month deposits, 500+ credit

What it really costs

A $50,000 advance at 1.30 means you repay $65,000. If it takes 8 months, that is a cost of $15,000 and an effective APR near 90%, because you are paying back so fast. The same $15,000 fee over 18 months is a far lower APR. Always run a quote through the advance cost calculator before you sign.

When it is the right tool

A confirmed opportunity with a fast return: a bulk inventory discount, a contract that needs equipment tomorrow, a seasonal push.
A short gap (a big receivable landing in 6 weeks) when you have no line of credit yet.
You have been declined for bank products because of credit, not because of revenue.

When it is the wrong tool

Refinancing older debt or covering a structural shortfall. Stacking advances is how businesses die.
Anything you can wait 2–3 weeks for. A line of credit or term loan will cost a third as much.

How to get a better deal

Get at least two quotes. Factor rates vary widely for the same file.
Ask for an early-payoff discount in writing.
Ask whether payments are a fixed amount or a true percentage of revenue. True percentage protects you in slow weeks.
Confirm there is no confession of judgment clause (banned in New York for out-of-state businesses, still around elsewhere).

Frequently asked questions

Is a merchant cash advance a loan?

Legally no. You sell a portion of future receivables at a discount. That is why it is quoted as a factor rate instead of an APR and why credit matters less than deposits. Some states (California, New York, Utah, Virginia and others) now require APR-style disclosures on these contracts anyway.

What credit score do I need?

Many funders approve 500+ if monthly deposits are consistent and there are no recent defaults. Above 650 gets you meaningfully better factor rates.

Can I pay it off early to save money?

Only if the contract has an early-payoff discount. Most do not by default; ask for one before you sign. Without it, paying early just raises your effective APR.