Merchant Cash Advance

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How Do I Qualify for a Merchant Cash Advance?

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6+ Months in Business

Money in hand

$500,000 in Annual Gross Sales

No Minimum Credit Score

What Is a Merchant Cash Advance?

A merchant cash advance, also called revenue-based financing, isn’t technically a loan. Instead, it’s a financing option that allows your business to get capital—quickly and easily—by utilizing future credit card sales.

Merchant cash advances can come with funding amounts as high as $5 million – making them a great alternative to traditional business loans. Even better, they’re much more accessible than other types of financing. Merchant cash advances for startups and younger businesses are a largely viable solution.

They offer access to fast, flexible financing without fixed-monthly payments. Instead, you’ll pay back your loan via a small percentage of future sales. This setup allows you can receive cash right away to put toward any new opportunity or business expense.

Merchant cash advances are ideal when you need funds now and don’t want to go through the hurdles of applying for more traditional forms of financing – such as business loans or SBA programs.

This type of financing is unsecured, so you’re not required to put up collateral. It also has the benefit of allowing you to keep your cash flow steady by making payments based on daily credit card sales instead of a set schedule. In other words, your payments can adjust according to how well your business is performing.

Merchant cash advances are ideal for businesses with high credit card sales or seasonal revenue fluctuations. Funds from a merchant cash advance can be put towards a large range of expenses – including operating costs, growth opportunities, and more.

How Does Merchant Cash Advance Work?

Unlike traditional loans, where you make payments to your lender on an agreed-upon schedule, merchant cash advances are repaid through small automatic deductions from your business bank account. Payments are predictable, and you don’t have to worry about your rate changing at any point during your repayment unless specifically outlined in your contract.

The application and approval process is identical to other types of financing, but the qualifications are much less stringent. Credit scores and time in business fall by the wayside in favor of a business’s profitability, with some lenders focusing only on a business’s revenue to determine eligibility.

Merchant cash advances have a negative stigma associated with them, but they’ve come a long way from their troubled predecessors. Today, revenue-based financing is leveraged by businesses large and small, allowing them to invest in growth-driving opportunities and keep themselves moving forward.

What Are the Benefits of a Merchant Cash Advance?

Some of the biggest benefits of a merchant cash advance include the resolution of short-term cash flow issues, flexibility when it comes to the funding of different expenses (such as covering unexpected costs or purchasing inventory) and speed. Additionally, you can get this type of funding even with bad credit.

Here are a few of the most notable benefits:

  • No personal guarantees
  • No real estate collateral
  • Flexible payment terms
  • Fast funding times
  • Limited eligibility criteria

Merchant cash advances are some of the fastest financing solutions available. Other types of business loans can take several weeks or months to process. However, merchant cash advances tend to deliver cash almost immediately. They’re especially popular among businesses with seasonal lulls or frequent cash flow disruptions.

Merchant Cash Advance Interest Rates

Merchant cash advances don’t have interest rates. Instead, they have factor rates, which work similarly with a few unique differences.

While interest rates are a percentage that’s applied to each payment, factor rates are decimal numbers that are much more straightforward. Let’s look at an example.

A client is given $300,000 at a 1.3 factor rate. To determine the cost of capital, the client multiplies their funding amount by their factor rate ($300,000 x 1.3). The result is the cost of the financing, which is added to the funding amount to illustrate the total amount the borrower must repay.

Factor rates range from 1.1 to 1.8 on average. The lowest numbers are given to the most trustworthy borrowers, whereas higher factor rates are given to businesses with less revenue and more risk.

How Can You Use Your Merchant Cash Advance?

There are a variety of ways you can use merchant cash advance funding in your business, including:

  • Materials/supplies
  • Payroll
  • Equipment and tools
  • Operating expenses, like rent, gas, and asset maintenance
  • Revenue-driving opportunities
  • And much more!

There are no restrictions—use your capital to pursue any opportunity or overcome any challenge!

When to Use Merchant Cash Advance

Merchant cash advances have various use cases, but their abridged repayment terms are best suited for opportunities that pay off in the short term and challenges that need to be solved immediately.

Here are a few cases where merchant cash advances are beneficial:

  • A restaurant has a slow month and is unable to make payroll. Using an MCA, they can get the cash they need to honor their liabilities and pay back what they owe when revenue picks up in the next month
  • A construction company is about to start a major contract but encounters cash flow challenges that restrict its ability to purchase needed materials and equipment. A merchant cash advance can yield the cash they need to start the project with confidence without jeopardizing short term cash flow
  • A natural gas broker anticipates losing a major client in the next month. The change will undoubtedly cause cash flow constraints, so they leverage a merchant cash advance to bridge the gap as they search for a new prospect.

There are many other situations where merchant cash advances can keep your business moving forward. If you have questions about how a merchant cash advance can help your unique circumstances, feel free to reach out to the expert Business Finance Advisors at National Business Capital.

Is a Merchant Cash Advance Right for Your Business?

Much like other financing options, merchant cash advances are great in specific use cases while not as powerful in others. Use the following checklist to see if a merchant cash advance is right for your business.

  • Do you have an immediate opportunity or challenge?
  • Will you benefit from the opportunity/plugging the challenge within 18 months?
  • Is your business profitable? Does your profitability outweigh your credit score?
  • Are you prepared to have payments automatically deducted from your business bank account?
  • Does the cost of your financing fit your bottom line?

If you’re looking for fast funding with limited eligibility requirements, merchant cash advances are great options. National Business Capital’s Business Finance Advisors can help you compare MCA products to other financing solutions to dig deeper into whether it’s a good move for your business specifically.

How Do I Qualify for a Merchant Cash Advance?

A merchant cash advance allows you to repay on the go, according to your business’s performance. When sales are high, you’ll pay down your debt faster. If sales slow, your payments will adjust accordingly. You can qualify for a merchant cash advance with National with:

  • 6+ months in business
  • $500,000 in annual gross sales
  • No minimum credit score

That’s right—there’s no credit score requirement when you secure a merchant cash advance with National. Our team draws on extensive lender relationships to secure approvals that competitors can’t, giving you an undeniable edge as you look to grow and outpace your competition.

Why Choose National Business Capital for a Merchant Cash Advance?

Better Terms. Faster Funding. Easier Process.

Accelerate your success with frictionless financing and expert advice that breaks down the barriers to growth for every entrepreneur. Thrive with access to a business lending marketplace that’s built for entrepreneurs, by entrepreneurs.

Experience a time-saving machine that cuts approval times from months to hours. Leverage an extensive network of over 75 lenders and teams of expert financing advisors to ensure you’ll always have access to the capital that best fits your business. 

Working with NBC, gain a financing partner for the future, ensuring your business has the capital it needs to seize every opportunity and grow without limits.

National Business Capital. Grow to Greatness.

Unlock the Lowest Rates, Longest Terms, and Highest Amounts

Money in hand

Loan Amount

$100,000 - $10,000,000

Flexible Terms

Approvals Custom-Tailored to Your Needs

Time to Fund

1–3 Days

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Soft Pull

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Merchant Cash Advance FAQs

You can access up to $250,000 in as little as a few hours.

Above that amount may take a bit more time, but most revenue-based financing funds within 1-3 days.

In most cases, no! Merchant cash advances rely primarily on a business’s profitability to determine eligibility.

Credit scores and time in business play lesser roles because the main driver of repayment is a business’s sales.

Lenders and brokers may charge additional fees for the service of connecting their clients with funding sources.

These fees vary from situation to situation, but make sure to ask about them if you’re curious.

Yes! Merchant cash advances can be subordinated, meaning they can fund at the second position and preserve senior financing (outstanding loans).

Some lenders may prefer not to work with clients with outstanding loans, but National Business Capital has a solution for every client.

Yes! Having good credit makes it easier and cheaper to secure financing – but it’s still possible to get a merchant cash advance with bad credit. In fact, many online lenders maintain no minimum credit score requirements for merchant cash advances.

When you apply for a merchant cash advance, your business’s revenue, or sales, will matter more than your credit score. This can be especially helpful if your business is new or hasn’t built up enough credit. In fact, it’s also one of the reasons merchant cash advances are incredibly accessible financing solutions.

There may be some variations in credit score requirements depending on the type of lender you work with. Some lenders, like traditional banks or credit unions, place enormous emphasis on your credit score. However, other lenders – specifically online lenders, take a broader look at your credentials. They’re more likely to consider your revenue, prospects for growth, time in business, as well as other factors.

Merchant cash advances are incredibly helpful for younger businesses, startups, and enterprises that haven’t built up enough credit history to apply for traditional business loans. They’re easily accessible, and funding times work fast – making them a great choice for businesses that need quick capital.

They’re also a solid fit for businesses that experience occasional cash flow disruptions or seasonal drops in revenue. Merchant cash advances can help fill in the gap where your own funds fall short.

Merchant cash advances are oftentimes thought of as a type of business loan, however, the laws governing the two are significantly different. With merchant cash advances, the financing company is essentially purchasing a percentage of your future sales at a discount.

You will receive an advance on your future revenue, which you’ll then pay back via a portion of your future revenue stream. By contrast, small business loans entail a company lending you funds in exchange for fixed payments.

Business loans can have repayment terms as long as 25 years, while merchant cash advances are designed to be short-term funding solutions. Although they don’t come with set repayment terms, most merchant cash advances are typically repaid within a year or less.

Merchant cash advances also tend to have much higher APRs than traditional business loans. However, this is offset by the fact that merchant cash advances are designed to be repaid quickly, which means you’ll spend less time in debt.

Merchant cash advances are ideal for businesses that need capital quickly – but for one reason or another, business loans aren’t a good fit. Perhaps your business is fairly new, or a startup, with not a ton of credit history built up. You may be unable to wait for a traditional loan approval process. Or you may also not have enough assets built up to qualify as collateral for a traditional loan.

In either of these scenarios, a merchant cash advance can be a helpful resource for accessing capital. As long as your business is able to forfeit a percentage of daily credit card sales towards debt repayment, merchant cash advances can be a good idea.

Absolutely, and you should take this one step further by shopping around relentlessly to find the best offer.

Limiting yourself to one lending option only returns one offer. If it doesn’t work out, you’re back to square one. Applying to multiple lenders gives you options to choose from and, more importantly, negotiating power at the table.

National Business Capital makes it easy to find, compare, and get the most money you qualify for. Complete our digital application to unlock your offers.

Merchant cash advances feature a lump-sum cash infusion that’s automatically repaid via your business’s daily credit card sales.

Say, for example, you take out a merchant cash advance that deducts 15% of your daily revenue. If you bring in $5,000 in credit card sales one day, $750 will be automatically deducted towards repaying your debt.

If the next day your business only brings in $1,000, you’ll only shell out $150 towards debt repayment. This way, your payment schedule is tied to how well your business performs on any given day.

Yes! When you apply for a merchant cash advance with National Business Capital, you may be eligible to receive a merchant cash advance in as little as 24 hours or less.

National is a FinTech marketplace that automatically connects you with a multitude of lenders, generating personalized financing offers based on your unique criteria and needs.

Simply browse your offers and select the best interest rates and terms available. If you have any questions, a dedicated Business Financing Advisor will step up to help along each step of the way.