Answers

Is a merchant cash advance a loan in Canada? A plain answer.

Usually not in its legal form. A merchant cash advance is typically structured as a purchase of a share of future receivables, repaid as a share of sales, rather than a loan with interest. Treat it as financing anyway: it costs money, it is a commitment and it should be compared in dollars with loan offers.

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Is a merchant cash advance a loan in Canada?

Key facts

Structured as a sale of future receivables
Priced with a factor rate, not an annual interest rate
A $30,000 advance at 1.25 means $37,500 of receivables sold
Compare total dollars and time to repay

How an MCA is structured

In a typical merchant cash advance, the funder pays the business a lump sum today in exchange for a specified amount of the business's future receivables, often card sales. The business remits an agreed percentage of those receivables, called the holdback, until the specified amount is paid. The total is set by a factor rate: a $30,000 advance at 1.25 means $37,500 of receivables are sold.

Because the agreement is a sale of receivables rather than a promise to repay a sum with interest, it is not priced with an annual interest rate. That is the main reason MCAs feel different from loans.

Why the distinction matters to you

Cost is shown as a factor rate, not an annual rate, so compare total dollars repaid.
Payment is tied to sales, so it should ease in a slow period under a true holdback.
Some agreements use fixed daily or weekly debits with a reconciliation right instead; check how yours works.
Agreements often include a personal guarantee of performance and general security registrations.

Comparing with a loan

To compare an MCA offer with a loan, write down the amount deposited, the total repaid, the expected time to repay and the payment in a slow month. A bank loan may cost less in total but take longer to get and require collateral. An MCA may cost more but arrive in days and flex with sales.

Where Canadian files usually start

Monthly revenueTypically from around $20,000 a month in deposits for Canadian files. The exact line varies by funder and by file.

Time in businessTypically about 12 months. Newer businesses can be reviewed, but the options narrow.

Account healthLimited low-balance or negative days. Funders read the last few months of bank statements for this.

CreditScores from 500 are considered. A score of 600 or higher opens more options and better offers.

DocumentsA signed application and recent business bank statements, typically the last four months.

Existing advancesFiles with an existing advance can be reviewed, including second position.

If your question is about your own file rather than the general rule, the fastest route to a specific answer is a review. Send a signed application and your last four months of business bank statements, mention this question in a note, and the response will address it directly. You can also call (305) 384-8391 and ask before applying; there is no cost to ask.

Questions owners ask next

Sources and review

Justice Laws: Criminal Code section 347 (criminal interest rate)

Reviewed by the Merchant Fund Express team on October 12, 2026. Official pages checked as of that date.

Common questions

Is a merchant cash advance regulated like a loan?

Commercial financing in Canada is not regulated the same way as consumer lending. Read the agreement carefully and ask questions.

Does an MCA show interest?

No. Cost is set by the factor rate. Convert it to total dollars to compare.

Can I still compare it with a loan?

Yes, by comparing total repaid and time to repay.