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MCA or Loan: Which is Better for Your Small Business?

Jul 22, 2021

Choosing between an MCA or loan can be a smart move for small businesses. According to a recent FTC Study, around 32% of small businesses apply for capital funding through online sources, like Merchant Cash Advances, instead of a traditional loan.  

What is a Merchant Cash Advance?

An MCA provides the borrower with a lump sum of money, often available within a few days of application approval. This is repaid through fixed daily deductions from the borrower’s bank account via ACH payments, plus a fee called a factor payment.

This is different from a traditional small business loan, which requires a lengthy application process and anywhere from a 10% to a 35% down payment.

MCA or Loan: When a Merchant Cash Advance is Best

Depending upon your business’s financial situation, you may want to choose a merchant cash advance, a traditional small business loan, or some combination of the two for your capital needs.

Small Business Loans

Traditional loans are a debt-based funding solution. There is typically a fixed interest rate determined when the loan is taken out and then monthly payments are made. While the Annual Percentage Rate (APR) is often lower, the qualification criteria are more extensive including credit checks and collateral.

Small business loans may be a better fit for your business if you need a longer loan term, have a very strong credit score, or have extensive collateral. They are also commonly chosen by small business startups who can afford to take time with the long approval process because they don’t need the funds immediately.  

In some situations, however, an MCA might be the better choice.

Merchant Cash Advance

By contrast, merchant cash advances are a financial product that has several perks for businesses not wanting to go through the long application process.

Funds are available quickly: Businesses like Reliant Funding offer approval in as little as 48 hours, as opposed to months for a traditional loan.

Easier to Qualify: Merchant cash advances don’t require extensive credit checks to quality, or collateral like a traditional loan.

Customizable Repayment: MCA’s are repaid fixed daily deductions from the borrower’s bank account via ACH payments.

Lump-Sum Funding: With an MCA, money is available in a lump sum upfront that your business can use for whatever it needs most.

Shorter Terms: Unlike a personal or business loan, MCA’s are more customizable because they often have a lifecycle under 18 months.

Good for Long Sales Cycles: If your business typically goes into the black at a certain time of year, MCA’s can help it get through months with lower sales volume.

Want to Save Time: Many MCA’s don’t require an in-person meeting with a lender. You can get approved online and handle repayments through automatic withdrawals.


Merchant cash advances allow small businesses to borrow money against the future sales of their business. In some cases, your business can be approved in as little as 48 hours. You can check rates and eligibility here


$3,098,641,569 dollars funded