Merchant cash advance vs revenue-based financing: closer than they look, priced differently.

Both take a share of revenue and both fund files banks decline. The difference is how the payment is calculated and how the cost is expressed.

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FactorMCA pricing

MultipleRBF pricing

Fixed or %MCA payment

% of revenueRBF payment

Side by side

Repayment basisMCA: a fixed daily or weekly debit, or a share of card settlements. RBF: a percentage of revenue.

When sales fallMCA: a fixed debit does not move. RBF: the payment falls with revenue.

PricingMCA: a factor rate on the advance. RBF: a repayment multiple.

TermMCA: usually 3 to 12 months. RBF: until the multiple is met, often 6 to 24 months.

Best fitMCA: card-heavy businesses and quick, short-horizon needs. RBF: recurring, digital and seasonal revenue.

QualificationBoth look at deposits, time in business and account health. Scores from 500 are considered.

Same $40,000, two structures

MCA at 1.25 repays $50,000, about $397 a day over roughly 126 business days.

RBF at 1.20 repays $48,000 at 8% of monthly revenue. At $60,000 a month that is $4,800, so about 10 months.

The MCA is $2,000 dearer in total here, but it is paid off in about six months.
The RBF costs less in total on these inputs and is gentler in a slow month, but takes longer.

How to choose

If most revenue is card settlements and you want the money gone quickly, an MCA is the natural fit.
If revenue is digital, recurring or seasonal and you value a payment that eases in slow months, look at revenue-based financing.
If you are unsure, apply once. The file is matched to the structure that fits.

Every figure on this page is illustrative arithmetic in Canadian dollars. It is not an offer, a quote or a promise of approval.

Common questions

Are they the same product?

No, but the line is blurry. Both are repaid from revenue. The MCA is priced with a factor rate on a purchase of receivables; revenue-based financing uses a multiple and a percentage.

Which costs less?

Neither is cheaper by default. Compare total payback in dollars on the exact offers, and compare the repayment period.

Which is easier to qualify for?

Qualification is built on similar things. Fit with the revenue pattern matters more than the product name.

Keep reading

Merchant cash advance CanadaHow an advance against future card sales works Revenue-based financing CanadaRepay a fixed multiple as a share of revenue MCA vs loan calculatorTotal cost against a term loan What it costsTotal payback, cost and comparing structures Factor rate explainedWhat a 1.25 factor really costs

Educational information only. It is not legal, tax or accounting advice.

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