MCA vs LOC
The big difference is not price, it is shape. One is a single lump sum with a fixed payback; the other is a limit you draw on and repay.
✓ Checking what you qualify for does not affect your credit score.
At Merchant Fund Express, here is the short answer: An advance is a lump sum with a fixed payback; a line is a limit you draw on and repay. A line is cheaper for recurring needs if you qualify.
| MCA | Line of credit | |
|---|---|---|
| Money arrives | One lump sum | Draw as needed up to a limit |
| Cost | Fixed total set at funding | Charged on what you draw |
| Repayment | Daily or weekly until paid | Regular payments on the drawn balance |
| Reuse | Replaced by a new advance | Repay and draw again |
| Qualify | Revenue and statements | Tier-one sheet: 3+ years, 650, steady balances |
| MCA | Line of credit | |
|---|---|---|
| Need | $30,000 to cover a seasonal inventory build over 3 months | Same need |
| What you take | $30,000 at once | Draw $30,000 for the period |
| Cost, illustrative | Factor 1.25: $7,500 | About 1% per month on the draw: about $900 |
| Repay | Over 4 to 6 months | Over 3 months, with balance falling |
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.
Recurring needs, seasonal swings and businesses that qualify for the lower cost
One-time needs, thinner files and situations where a line is not available yet
A line of credit from 1% per month is among the cheapest products on this site; it is a tier-one product. If you hold an advance and the file clears the line, a buyout can retire the advance into the line. See business line of credit and MCA refinance.
A nursery needs inventory every spring and carries a seasonal balance. A line of credit lets it draw $30,000 for three months at about 1% a month, roughly $900. The same amount as an advance at 1.25 costs $7,500. The line needed three years and a 650 score; once the nursery got there, it moved off advances for good.
Source: Merchant Fund Express.
A line of credit can sit in second position, subject to serviceability. See position limits. That is how Merchant Fund Express reads it on a real file.
A line, if you can get one. It gives you capacity you do not have to use.
Typically not. You pay on what you draw; confirm any maintenance fees in the agreement. Source: Merchant Fund Express.
Check the line first; if the file does not clear it, compare advances.
Merchant Fund Express gives a same-day decision. Applying takes a few minutes and will not affect your credit score.
