Taking a small business to the next level can present a business owner with more than a few challenges. The common thread with most of these is a lack of working capital and often the need for that capital is urgent. Although there has been some improvement in approval rates in recent years, obtaining a business loan from the bank may not be the best choice. In some cases, it may not even be an option if you don’t meet the bank’s stringent requirements. So what does a small business owner in need of quick capital or a short-term loan do? Today’s alternative and online lenders offer a variety of different funding options, including the merchant cash advance.

This type of funding can provide you with the cash you need when you need it. However, when deciding if a merchant cash advance or any type of funding is right for your business, you need to have a good understanding of the process, repayment terms and any interest or fees involved.


A merchant cash advance, or MCA, isn’t actually a loan. It is a purchase agreement between a business owner and a funding company. The funding company pays the business owner a lump sum in return for an agreed upon percentage of their future credit card and debit card sales, in addition to a fee. As approval is based on different criteria than with a traditional bank loan, there is less paperwork. This streamlines the application process, allowing funding to be approved in a few days.


The MCA is intended for businesses that need a small amount of working capital quickly and for a short period of time. Banks are focused on credit scores and long-term loans which are more profitable. Even if you have time to go through the long drawn out process of applying for a traditional business loan, there is a good chance it will be denied.

In addition to providing a small business with the quick, short-term working capital it needs, an MCA provides other benefits as well. The approval rates are higher than that of traditional bank loans, due in part to the criteria an MCA determination is based on. You don’t need to provide tax returns or financial documents when applying for and MCA, nor do you have perfect credit. In most cases, a credit score of 550 is sufficient. Because repayment is fueled by credit and debit card sales, your business sales history is of much more interest to alternative and online lenders. Also, collateral is not required for an MCA.

While repayment of an MCA is a percentage of credit and debit card sales, the amount of your payments will vary based on sales. While it can seem like this would make it difficult to budget, it keeps your payments in line with your income, preventing you from facing a payment you can’t afford. If sales were down in a particular month, so was your payment. An MCA can be the perfect funding solution for a business that received most of its revenue via credit and debit cards.


While an MCA may be the perfect solution for some small businesses, it may not be a good choice for others. It’s important to do your due diligence when selecting a funding option to grow your small business.

At Superior Business Funding, we can help your business grow faster with a variety of small business funding options. We will guide you in choosing the perfect solution for your individual business needs. Our team brings to the table more than 60 years of institutional investment banking experience in the credit, commercial finance, and capital markets.

We are a privately owned and operated specialty finance and alternative funding platform. We focus on providing capital access to small and mid-sized businesses (Merchants) in the U.S. that have historically been underserved by traditional financial institutions and may have experienced challenges obtaining timely financing. Contact us or apply online today!

Leave a Comment

Your email address will not be published. Required fields are marked *