Merchant Cash Advance
Put your future sales to work now, repaid automatically as a small share of your daily card receipts.
A few months of card statements is all it takes to see your offer.
What is a merchant cash advance?
A merchant cash advance, or MCA, from FundBetter gives you a lump sum today in exchange for a small, fixed percentage of your future sales, so growth capital is within reach the moment you need it. Instead of a fixed monthly payment, repayment happens on its own as a share of your daily or weekly card receipts, leaving your cash free to move with the business.
An MCA rewards businesses with steady card volume that would rather move fast and keep repayment flexible than chase the lowest possible cost.
Benefits of a merchant cash advance
Fast, flexible capital
Money can reach your account in as little as 24 hours, backed by one of the simplest approvals in business financing.
Payments flex with sales
Because repayment is a share of your receipts, slow days cost you less and busy days carry more of the load.
Approval beyond credit
An MCA weighs your sales volume, not just your credit, so a lower credit score doesn't shut you out.
No fixed monthly bill
Nothing to invoice, nothing to remember. The holdback comes out of your receipts automatically, so there's no due date to miss.
How does a merchant cash advance work?
Qualifying is refreshingly simple: a few months of your sales or bank statements is all it takes to start. FundBetter reviews your card and deposit volume, then comes back quickly with an advance amount and the percentage of sales used for repayment.
Accept the offer and funds often arrive within 24 hours, among the fastest turnarounds in business financing. From there, repayment runs on its own as an agreed share of your daily or weekly sales, until the advance and its fee are paid in full.
How merchant cash advance factor rates work
Understanding what an advance costs is simpler than it looks, and it starts with one idea: a merchant cash advance isn't priced with an interest rate. It's priced with a factor rate, a simple multiplier applied to the amount you receive. Factor rates commonly land somewhere between 1.1 and 1.5. Multiply the advance by that number and you have the total you're obligated to repay. Nothing else is added, and nothing is taken away.
Work through it with round numbers. A $50,000 advance at a 1.3 factor rate means $65,000 in total repayment. The cost of the money is $15,000. Say the agreement sets your holdback at 12 percent of card sales and your business averages $2,500 in card sales a day. About $300 goes toward the advance each business day. At that pace the $65,000 clears in roughly 217 business days, or about ten months.
Here's where owners get tripped up: a factor rate isn't an APR, and treating it like one will mislead you. An APR accounts for how long you hold the money and for the fact that your balance shrinks as you pay it down. A factor rate ignores both. The $15,000 is set the moment you sign. If sales run hot and the same advance clears in five months instead of ten, you still pay $15,000, only twice as fast. Compress the same fixed fee into half the time and the effective annualized cost roughly doubles. On short, fast-repaying advances that figure can reach well into the triple digits.
That math is why paying an advance down early doesn't save you money the way it does on a term loan: there's no remaining interest to avoid. So the honest test is whether the fixed dollar fee buys something worth more than the fee: inventory retail businesses will sell at a markup within weeks, or a repair that keeps the doors open. If your business can wait two or three weeks, and your credit and financials support a term loan or a line of credit, that route will almost always cost less. An advance earns its price when speed or approval is the real constraint.
Merchant cash advance vs. a short-term business loan
Owners weigh these two constantly, and for good reason: both put money in your hands quickly. Where they part ways is what happens once the funds land in your account, and seeing them side by side makes the smarter fit clear.
| How they differ | Merchant cash advance | Short-term business loan |
|---|---|---|
| How repayment is collected | An agreed percentage of your daily or weekly card receipts is remitted automatically, before the money reaches your operating account. | A set payment is debited on a fixed schedule, typically daily, weekly, or monthly. |
| Do payments flex with sales | Yes. Quiet days cost you less and busy days cost you more, so the payoff date moves with your volume. | No. The payment is identical whether the week was strong or weak. |
| How the cost is expressed | A factor rate that fixes one dollar amount owed. Repaying sooner does not reduce it. | An interest rate plus fees, quoted as an APR, with a defined term and a known payoff date. |
| Typical speed to funding | As fast as 24 hours. Sales statements do most of the underwriting work. | Usually a few days, because credit history and financials carry more weight in the decision. |
| Who it suits | Businesses with steady card volume, such as restaurant operators, facing an expense that will not wait or credit that rules out cheaper products. | Businesses that can wait a little longer and qualify for a lower total cost. |
Pros and cons of a merchant cash advance
Speed has a price, and FundBetter won't hide it: a merchant cash advance is the most expensive product on our shelf, so we point you toward a cheaper option whenever you qualify for one.
An advance makes sense when
- Your card volume is steady and predictable, as it is for most salons and spas, so the holdback stays manageable week to week.
- The need is urgent, as it is for an auto repair shop with a lift down, and waiting two or three weeks would cost you more than the fee does.
- Your credit sits near the 520 range and cheaper products are not open to you yet.
- The capital pays for itself fast, such as the inventory grocery stores turn over within weeks.
- Your business has been open six or more months but is still too young for most term lenders.
An advance is the wrong choice when
- You are covering a shortfall with no clear reason to expect sales to recover.
- You already carry an advance and a second holdback would squeeze payroll.
- You would qualify for long-term business loans or a line of credit and simply have not applied.
- A slow season is coming, since the fixed total stays due while daily remittances shrink.
- You are counting on an early payoff to cut the cost, which a factor rate does not allow.
Merchant cash advance terms to understand
Six numbers and provisions decide what an advance truly costs you and how it feels day to day. Know each one and you sign with full confidence, never a surprise.
Advance amount
The lump sum deposited to your account, anywhere from $5,000 to $5 million. Because the factor rate multiplies this figure, it drives your total cost directly, so borrowing only what the need requires keeps the fee in check.
Factor rate on the advance
The multiplier that sets your total repayment, locked in the day you sign. Always ask for the rate and the dollar total together, since the dollar total is what actually leaves your business.
Advance holdback percentage
The share of each day of card sales routed to repayment, often somewhere between 5 and 20 percent. The higher it runs, the more it squeezes your working cash while the advance lasts, which is why fuel retailers working on thin per-gallon margins watch this number closely.
Advance remittance frequency
How often the holdback is collected, usually daily or weekly. Daily remittance spreads the impact evenly across the month, while weekly leaves more cash in hand day to day but lands in larger amounts.
Estimated term of the advance
An advance has no fixed maturity date. Any term you're quoted is only an estimate built from your expected sales pace. Slower sales stretch it out, while faster sales shorten it and push the effective annualized cost higher.
Reconciliation on the advance
A provision that adjusts your remittances when real sales fall short of the estimate used at signing. It can protect cash flow in a slow stretch, but not every agreement includes one, so ask.
Best ways to use a merchant cash advance
An advance suits businesses with steady card volume and a need that will not wait.
- Restock inventory fast
- Prepare for a busy season
- Handle an urgent expense
- Fund a marketing push
- Make a quick repair
- Cover an unexpected tax bill
Who qualifies for a merchant cash advance?
Card volume matters more than credit score here, which makes an advance one of the most accessible options we offer.
Frequently Asked Questions
What is a factor rate on a merchant cash advance?
A factor rate is a multiplier that sets your total repayment. A $50,000 advance at a 1.3 factor rate means $65,000 repaid, a fixed cost of $15,000. It isn't an interest rate and it isn't an APR, because it doesn't change based on how long repayment takes. Ask for the rate and the dollar total together before you accept.
Does paying off a merchant cash advance early save money?
Usually not. The total is locked in by the factor rate the day you sign, so clearing it in five months instead of ten costs the same dollars, just faster. Some providers will discount an early payoff, but it's never automatic. If that matters to you, ask whether any reduction is written into the agreement before you accept it.
What is the holdback percentage on a merchant cash advance?
The holdback is the share of your daily or weekly card sales routed toward repayment, commonly somewhere between 5 and 20 percent. It's taken before the money reaches your operating account. A higher holdback clears the balance faster but leaves less cash for payroll and suppliers, so the percentage deserves as much attention as the total cost.
What happens to my advance if sales drop?
Your remittances drop with them, because you're repaying a percentage rather than a fixed amount. The total owed doesn't change, so a long slow stretch simply extends the repayment period. Some agreements include a reconciliation provision that adjusts remittances to match actual sales. Ask whether yours does and what documentation is required to use it.
How is my merchant cash advance amount decided?
Card and deposit volume is the main input. An advance is sized against a portion of your monthly sales, which is why $15,000 or more in monthly card sales carries more weight here than a credit score. Amounts run from $5,000 to $5 million. Stronger, steadier volume supports both a larger advance and a better factor rate.
Is a merchant cash advance cheaper than a business loan?
No. An advance is the most expensive form of funding we offer. It's priced for speed and for approval in situations where credit closes off other doors. If your business can wait a few days longer and qualifies for a term loan or a line of credit, the total cost will almost always be lower, and if you bill other businesses, invoice factoring is cheaper still. We'll tell you which options are open to you.
Other business funding options
Revenue-Based Financing
Similar flexible repayment, drawn from total revenue and usually cheaper.
Learn moreShort-Term Business Loans
A fixed schedule that typically costs less than an advance.
Learn moreBusiness Lines of Credit
Reusable credit if the need is recurring rather than one-time.
Learn moreFuel growth with a merchant cash advance
Share a few months of statements and see your offer. Free to check, with no credit impact.