A merchant cash advance is not technically a loan. With an MCA, a financing company advances you cash in exchange for a percentage of your daily credit card and debit card sales, plus a fee. Merchant cash advances can be quick, easy ways to get a business cash advance with no need for collateral—even if you don’t have a great credit score.
MCA providers evaluate risk and weigh credit criteria differently than a banker or other lenders. They base the underwriting on future receivables. They also look at daily credit receipts to determine if a business can pay back the advance in a timely fashion. As a result, rates on MCA may be higher than other financing options so its good to understand the terms your’re being offered so you can make an informed decision.