What is a merchant cash advance?
A merchant cash advance (MCA) is not a loan — it's the purchase of a portion of your future sales at a discount. You receive a lump sum and repay it automatically through a small percentage of your daily card sales or bank deposits, so payments flex up and down with your revenue. Approval is based on your monthly revenue and bank deposits rather than credit score or collateral, and is subject to funder approval. The cost is expressed as a factor rate (commonly 1.15–1.50), not an interest rate. Slate Financial is a brokerage that matches you to MCA funders and explains the full cost before you commit — pre-qualifying uses a soft pullthat doesn't affect your score.
See what you qualify for — 60 seconds →Merchant cash advance overview
A Merchant Cash Advance (MCA) provides fast working capital to businesses based on future sales revenue rather than traditional credit metrics. Unlike a loan with fixed monthly payments, an MCA involves purchasing a portion of your future receivables at a discount. Repayment is automated through a small percentage of your daily credit card sales or bank deposits, which means payments flex up and down with your revenue.
MCAs are designed for speed and accessibility. Approval timelines vary by funder, and funding arrives as soon as the funder allows, subject to approval. The qualification process focuses on your monthly revenue and bank deposit history rather than credit scores, collateral, or years in business, making MCAs available to businesses that may not qualify for traditional financing.
Slate Financial works with MCA providers who offer transparent terms. While MCAs carry a higher cost of capital than traditional term loans, they serve an important role for businesses that need capital urgently, have been declined by banks, or prefer the flexibility of revenue-based repayment. Our team ensures you understand the total cost and structure before you commit, so you can make an informed decision.
Best for businesses that need fast working capital and prefer revenue-based repayment over fixed monthly loan payments, subject to funder approval.
How a merchant cash advance works
- Submit a brief application along with your last 4 months of business bank statements and a voided check. No tax returns or financial statements required.
- The underwriter reviews your average monthly deposits, daily balances, and revenue consistency to determine the advance amount and repayment structure.
- You receive an offer detailing the advance amount, factor rate, total repayment amount, estimated daily or weekly payment, and term length.
- Upon acceptance, a simple contract is executed and funds are deposited directly into your business bank account, subject to funder approval.
- Repayment begins automatically through daily or weekly ACH debits from your business account, calculated as a fixed percentage of your revenue or a fixed daily amount.
Who qualifies for an MCA
- Minimum 4 months in business with an active business bank account
- Average monthly bank deposits of $10,000 or more
- No minimum credit score requirement (all credit types considered)
- No open bankruptcies (prior discharged bankruptcies may be acceptable depending on timing)
- Business must be based in the United States with a valid EIN or SSN
Slate Financial is a lending brokerage, not a direct funder — we match you to MCA providers across our network and make sure you understand the total cost first. Pre-qualifying is a soft pull and is not an approval; final terms come from the funder.
Typical MCA terms
| Term | Typical range |
|---|---|
| Advance Amount | Subject to lender approval |
| Factor Rate | 1.15 - 1.50 |
| Repayment Term | 3 - 18 months |
| Payment Frequency | Daily or weekly ACH debit |
| Holdback Percentage | 5% - 20% of daily revenue |
| Time to Fund | Subject to funder approval |
Ranges reflect what is common across funders; your actual offer depends on your revenue, deposit history, and the funder's underwriting. These are not quoted rates.
Pros and cons of a merchant cash advance
Pros
- Fast funding, subject to funder approval
- No minimum credit score requirement; approval is based on revenue, not credit history
- Minimal documentation required — just bank statements and basic application
- Flexible repayment adjusts with your revenue so payments are lower during slow periods
Cons
- Higher total cost of capital compared to traditional loans (factor rates of 1.15 to 1.50 translate to high APR equivalents)
- Daily or weekly automated debits can strain cash flow, especially during slow revenue periods
- Not a loan — you are selling a portion of future revenue, so the total payback amount is fixed regardless of how quickly you repay
- Stacking multiple MCAs can create a cycle of escalating payments that becomes difficult to manage
Merchant cash advance FAQ
What is a factor rate and how does it differ from an interest rate?
A factor rate is a multiplier applied to your advance amount to determine the total repayment. For example, a $100,000 advance with a 1.30 factor rate means you repay $130,000 total. Unlike interest, which accrues over time and decreases as you pay down the balance, a factor rate is fixed from the start. This means the total cost does not decrease if you repay early unless your contract includes an early payoff discount.
Can I get an MCA if I have bad credit?
Yes. MCAs are one of the most accessible financing products for business owners with low credit scores. Approval is based primarily on your monthly bank deposits and revenue consistency rather than your personal credit score. Many MCA providers do not even check credit, and those that do use it as one of many factors rather than a primary qualifier.
How much of my daily revenue goes toward repayment?
The daily holdback typically ranges from 5% to 20% of your gross daily revenue or bank deposits. The exact percentage is set at the time of the agreement based on your revenue level and the advance terms. For fixed-payment MCAs, the daily debit is a set dollar amount rather than a percentage, which remains constant regardless of your daily sales.
Can I pay off my MCA early to save money?
This depends on your specific contract. Some MCA agreements include an early payoff discount, meaning the total repayment amount decreases if you pay early. Others do not offer any early payoff benefit — you owe the full factor rate amount regardless of how quickly you repay. Always confirm the early payoff terms before signing your agreement.