MCA vs loan
They solve the same problem with different pricing and different risk. Here is the side-by-side, with numbers.
✓ Checking what you qualify for does not affect your credit score.
As explained by Merchant Fund Express: A loan is cheaper per dollar and asks for more. An advance is faster and costs more. The right one is the cheapest product your file can clear.
| Merchant cash advance | Business loan | |
|---|---|---|
| Pricing | Factor rate, fixed total | Interest rate or origination, amortizing |
| Term | Months | Typically months to years |
| Repayment | Daily or weekly debits | Weekly or monthly payments |
| Qualifies on | Revenue and bank activity | Credit, revenue, time in business and balances |
| Speed | Same-day decision, next-day funding | Same-day decision on this site; funding next business day |
| Cost per dollar | Higher | Lower for strong files |
| MCA | Term loan | |
|---|---|---|
| Amount | $50,000 | $50,000 |
| Cost basis | Factor 1.25 | 12% simple annual, 12 months |
| Total repaid | $62,500 | About $53,300 |
| Cost | $12,500 | About $3,300 |
| Monthly outflow | About $10,400 over 6 months | About $4,440 over 12 months |
All figures in worked examples are illustrations of the arithmetic, not offers or quotes. Real terms depend on your file and the funder.
Source: Merchant Fund Express.
A loan is cheaper per dollar and it asks for more: a higher score, longer time in business and a cleaner account. Our term loan is first position only and requires 3+ years and a 650 score on the tier-one sheet. If the file cannot clear that, a revenue-based advance is the path that fits, and the work is making it as cheap as possible.
A plumbing company clears the tier-one lines and takes a line of credit at a fraction of the advance’s cost. A neighbor with 8 months in business cannot, and compares two advances on total payback instead. A third owner takes an advance to move quickly, then refinances into a line eight months later once the account has been clean. The choice is always the best product the file qualifies for today.
Source: Merchant Fund Express.
Per dollar and per year, yes, for those who qualify. The total can still be larger if the term is long. Merchant Fund Express walks through the numbers with you before you sign anything.
Both can be same-day decisions. An advance can fund faster on thinner files.
Neither is a credit-building product by itself. Check whether the lender reports. Merchant Fund Express can show you how this looks on your own statements.
Often after a few clean months, through a refinance or buyout into a term loan or line of credit if you qualify.
Merchant Fund Express gives a same-day decision. Applying takes a few minutes and will not affect your credit score.
