What’s the Difference Between a Merchant Cash Advance and a Loan?

Businesses are looking for the capital to grow and expand their footprint. Some key differences are waking business owners to the advantage of a Merchant Cash Advance (MCA).

These differences include tremendous benefits like:

  • Convenient and affordable repayment terms
  • A lump sum of cash quickly compared to traditional business loans
  • Flexible lending amounts to address your business needs
  • No use-case limitations on how you spend your money
  • Revenue-based collections that fit the profitability of your business

Entrepreneurs need business funding that moves at the speed of their business. So let’s look at how a merchant cash advance and a business loan match up.

How a Merchant Cash Advance Works

A merchant cash advance (MCA) represents a modern funding option that small businesses repay to the MCA company. A business owner can complete an online eligibility check through the initial contact

You will provide some information about your business. This information will help MCA professionals get a clear picture of your company. After applying, you can receive an MCA offer to purchase your future sales.

Part of the repayment process is to leverage credit and debit card sales for timely processing. This processing approach allows you to have the profitability of your business support responsible funding. In addition, higher card sales mean you can repay the MCA even sooner.

An MCA is one of the most straightforward financing instruments you can use.  

Application Process for a Business Loan

Once your business decides the funding it needs, a business loan process can be lengthy. The whole process can take between 60 and 90 days. Qualifying for a loan in itself relies heavily on credit score.

Your rating between the three major credit bureaus is a massive factor in your creditworthiness. Meanwhile, there are requirements around the time you have been in business. Borrowers for a business loan with less than ideal credit will struggle for approval.

Not only does your credit rating weigh into the equation, but collateral also requires you to secure the loan with your assets. Lenders may require your guarantee of loan repayment by making your equipment or other assets available. If non-repayment, they will seize your assets to recoup losses on the business loan.

Funding speed can vary across different lenders, and your business history and credit rating play a more prominent role than a merchant cash advance.

Business Loans vs. Merchant Cash Advance

Business owners are often in need of funding but lack collateral. The profitability of your business assures repayment with an MCA. In addition, being a new business or prospective business owner does not disqualify you with an MCA.

A business loan may deny your application due to a lack of time in business. Meanwhile, use case restrictions can sometimes apply to business loans, even for qualified borrowers. This use-case restriction means the lender determines how you spend your money.

MCA has flexible use. For example, your business may spend $11,000-$125,000 on equipment to render service. A business loan can restrict those dollars to only equipment, even while your operating costs demand cash elsewhere.

Putting your capital to work should happen on your terms and when needed. When business owners look for funding quickly, they turn to a merchant cash advance in growing numbers.


A Merchant Cash Advance can be of tremendous value to your business. However, every owner has to consider the benefits and requirements of an MCA to determine if it is a fit for them. Go to Disruptive MCA to uncover how funding is evolving to keep pace with a growing business landscape.

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