💰Merchant Cash Advance

☝🏽Short Description: While Merchant Cash Advance is offered by a decent amount of lenders, it is not technically a loan. It is basically the old school cash advance tailored towards small businesses. The lender advances you cash then takes a portion of your daily sales, plus a fee. Merchant cash advances are quick and accessible for business owners with bad credit - however - tend to be expensive.

Loan Amount

5k - 500k

Loan Term


Interest Rate

1.14 - 1.49

Time to Funds

1 business day


  • Bad credit - OK
  • Easy approval
  • Faster funding
  • Funds can be used for a wide range of purposes


  • High-interest rate - Factor rate
  • Shorter terms
  • Less flexibility with repayment

1️⃣ What kind of businesses get Merchant Cash Advance?


As we said earlier, a merchant cash advance is the same old school cash advance but tailored towards small businesses. However, there are two major features of merchant cash advance that determine the type of businesses that are likely to get them. 


The first key feature is to focus on subprime customers. It basically means that merchant cash advance is focused on those business owners that have lower than average credit score. So if you have little or no collateral, limited time in business or your credit isn’t perfect merchant cash advance is usually the way to go.


The second key feature comes from the fact that lenders withdraw fonts on a daily basis. This means that the primary candidate for this type of loan is the type of business that generates high amounts of cash flow, for example, restaurants, coffee shops, supermarket and truck companies.


2️⃣ How does the process work?


Applying for a cash advance is simple. Most lenders we have at Riche Lending offer merchant cash advances. Lenders will look into your bank statements and general financial health to determine how much the cash advance could possibly be. They will calculate your average deposits per month to figure out the amount of the loan they can offer. Merchant cash advance applications are almost always online and usually approved the same day. Because this process is fairly quick MCA is usually expensive.


3️⃣ Understanding the factor rate


Merchant cash advance has a very specific way of calculating interest, instead of a straight interest rate they use what's called the factor rate. Basically, multiply your loan amount to the factor rate to figure out the total you owe. If the length of the advance is equal to one year, the factor rate equals your APR, but remember, the true APR can get up to triple digits for MCAs that are shorter than 1 year.


A merchant cash advance is expensive because it helps the riskiest borrowers, those with defaults and newer businesses. Lenders have to take higher risk and demand a higher return. 


4️⃣ Should I take a merchant cash advance? Is it worth it?


At the end of the day you have to make a business decision, merchant cash advance allows you to get funds quickly and the funds are unsecured (you don’t have to present collateral). For many business owners, a merchant cash advance is the only option. If you are one of those unfortunate business owners then you should seriously consider this product, however, if your credit score is good enough to qualify for better products, Richie Lending offers you to go ahead and try all other options first. 

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