Merchant Cash Advance
Capital Fast Enough to Take the Job
Your deposit history is your application — lump sum advances collected via fixed ACH payments. No collateral, same-day funding available.
What Is a Merchant Cash Advance?
Merchant cash advances are structured as purchases of future receivables — the funder buys a portion of your future revenue at a discount and pays you a lump sum today. For years, this framing allowed funders to sidestep state usury laws by arguing MCAs are not loans. That defense has weakened for ACH-structured MCAs specifically: in early 2025, a New York court ruled that Yellowstone Capital's ACH-based MCAs were disguised loans because the fixed daily debits had no genuine connection to actual revenue. CC split MCAs — where payments are a real percentage of daily card sales — have not faced the same ruling. In practice, the mechanics remain the same — no traditional interest rate, no maturity date, no fixed monthly payment — but the cost of capital is real.
The term "merchant cash advance" gets used loosely — you may have also heard it called a working capital advance, business cash advance, or revenue-based funding. These all generally refer to the same product category.
What most people do not realize is that there are two distinct repayment structures: CC split (holdback on card sales) and ACH funding (fixed daily debit from total deposits). They work differently, cost differently, and suit different businesses. More on that below.
Funding speed
Same day–48 hrs
Advance amounts
$5K–$500K
Repayment
Split or ACH debit
How a Merchant Cash Advance Works
Four steps from application to funded.
Apply in minutes
3–6 months of bank statements. For CC split, card processing statements too. No tax returns, no business plan, no P&L required.
Underwriting based on revenue
Funders analyze deposit volume, deposit consistency, NSF history, and existing advance positions — not just credit score.
Receive a lump sum
Funds are deposited directly to your business bank account — often same day, always within 48 hours of approval.
Repay via CC split or daily ACH
CC split: a fixed % of your daily card sales is remitted automatically. ACH funding: a fixed dollar amount is debited from your account daily or weekly. Both continue until the agreed total is paid.
CC Split vs. ACH Funding: Two Ways MCAs Are Repaid
Today, roughly 70% of merchant cash advances are structured as ACH funding — not the credit card split the name historically implied. The two structures work differently and suit different types of businesses.
CC Split (Holdback)
The traditional MCA structure. The funder takes a fixed percentage of your daily credit and debit card sales — the holdback rate, typically 10–20% — directly from your card processor. Payments flex automatically with your revenue: slow day, lower payment; busy day, higher payment.
Best for:
- E-commerce and online retailers
- Restaurants and quick-service food
- Card-only salons and barber shops
- Any business with high, consistent card volume
ACH Funding (Fixed Debit)
The modern, dominant form of MCA. Repayment is a fixed daily or weekly ACH debit from your business bank account — a set dollar amount, not a percentage of card sales. Because ACH funding looks at total deposit volume (cards + cash + checks + wires), it is accessible to businesses that do not rely heavily on card transactions.
Best for:
- Contractors paid by check or wire
- Trucking and logistics companies
- HVAC, plumbing, and electrical
- Auto repair and body shops
- Wholesale and manufacturing
Side-by-side example: Same restaurant, two structures
Monthly revenue: $100,000 ($80K card / $20K cash) — Advance: $30,000
CC Split
- Factor rate: 1.45
- Total payback: $43,500
- Cost of capital: $13,500
- Holdback: 12% of daily card sales
- At $80K/month card: ~$9,600/mo → ~4.5 months
ACH Funding
- Factor rate: 1.35
- Total payback: $40,500
- Cost of capital: $10,500
- Term: 120 days
- Daily ACH debit: $337.50 (fixed)
| CC Split | ACH Funding | |
|---|---|---|
| Typical factor rate | 1.25–1.50x | 1.15–1.35x |
| Daily payment | % of card sales | Fixed dollar amount |
| Slow-day payment | Automatically lower | Same — does not flex |
| Revenue assessed | Card sales only | Total deposits (all sources) |
| Cash flow risk | Lower — built-in flexibility | Higher on slow days |
| Best for | High card volume, volatile seasons | Stable revenue, mixed payments |
How Factor Rates Work
Both ACH Funding and CC Split use a factor rate to set the total repayment amount. Here is the math.
The formula
Total repayment = Advance amount × Factor rate
Example: $30,000 × 1.35 = $40,500 total owed
ACH daily debit = Total repayment ÷ Term (days)
CC split daily payment = Daily card sales × Holdback %
Unlike interest, the factor rate cost is fixed at signing. Pay it off in 90 days or 9 months — the total owed stays the same unless the agreement includes an early payoff discount.
ACH funding cost examples
| Advance | Factor rate | Total owed | Cost of capital | Term | Daily ACH debit |
|---|---|---|---|---|---|
| $10,000 | 1.20 | $12,000 | $2,000 | 90 days | $133 |
| $10,000 | 1.30 | $13,000 | $3,000 | 120 days | $108 |
| $25,000 | 1.25 | $31,250 | $6,250 | 150 days | $208 |
| $50,000 | 1.30 | $65,000 | $15,000 | 180 days | $361 |
For CC split, replace "daily ACH debit" with: daily card sales × holdback % = daily payment. Payoff timeline varies with sales volume.
To convert a factor rate to APR for side-by-side comparison with a traditional loan: (cost of capital ÷ advance amount) ÷ term in days × 365. A 1.30 factor rate on a 90-day term works out to roughly 122% APR — high by any measure, which is why MCAs should be a short-term tool, not a recurring funding source.
What MCA Funders Actually Look At
Credit score is the least important factor. Here is what actually determines approval and pricing.
Total deposit volume (ACH) or card processing volume (CC split)
For ACH funding, funders analyze your total monthly deposits — cards, cash, checks, ACH, and wires. For CC split, card processing volume is the primary metric. In both cases, 3–6 months of consistent volume matters more than your credit score.
Deposit consistency
Funders want steady patterns, not necessarily growth. Month-to-month chaos in deposits — $90K in April, $28K in May, $75K in June — is a bigger concern than the absolute level. Seasonal dips are expected; unexplained volatility is not.
NSF frequency
More than two or three NSFs in a three-month window is a serious red flag. Overdrafts signal that cash management is already stretched. Most funders will decline or significantly reprice above three NSFs per quarter.
Existing advance positions
One active MCA is normal. Multiple simultaneous advances (stacking) signal a cash flow problem that more debt cannot solve. Funders check for existing positions and most require a statement confirming no undisclosed advances.
Revenue trend
Flat is fine. Rising is ideal. Declining revenue over 3–6 months is a problem — funders see it as a sign the business is contracting, which raises repayment risk even on a flexible structure.
Time in business
Most funders require a minimum of 6 months in business. Longer operating history and stable deposit patterns override weak credit almost entirely in the underwriting decision.
No hard credit pull. Tell us about your business and we'll show you what you qualify for.
Get a Free EstimateMultiple MCA Positions: One Is Normal, Three Is a Spiral
Most businesses with an active MCA will eventually be approached for a second one. Here is how to think about the stack before it becomes a problem.
One position
Normal. Most funders expect it and factor it into underwriting. They look at the remaining balance relative to your daily revenue and work with it. Having one active advance does not disqualify you from a renewal or a second product.
Priced for and expected by underwriters.
Two positions
Yellow flag. Two simultaneous daily debits can be manageable if combined payments stay below ~15% of daily revenue and the second advance is funding real growth, not covering the first one's payments. If the second was taken to bridge a cash shortfall caused by the first, that is the beginning of a spiral.
Run the math: combined daily debits ÷ average daily deposits. Above 15–20% is unsustainable.
Three or more
Stacking. Most reputable funders will decline new applications. Combined daily ACH debits typically consume 25–40%+ of revenue. Each funder knows they are in a race — if the business struggles, all of them accelerate collection simultaneously. Consolidation is the only structured path out.
More debt does not fix this. Consolidation does.
How businesses end up with three advances
Some stacking is the result of a genuine cash flow problem compounding over time. But a significant share of deep stacking is broker-driven — some syndication shops simultaneously submit a merchant's application to multiple funders, collecting a commission from each one that funds, without fully disclosing to the merchant (or the funders) that multiple advances are being placed at the same time. By the time the merchant realizes all three positions are live and the combined daily debits are unsustainable, the broker has been paid and moved on.
How broker-driven stacking works — and how to spot itIf you are already in multiple positions
Each active MCA funder can provide a payoff letter — a document showing the exact remaining balance and the amount required to fully satisfy the advance. Payoff letters are required for consolidation and most funders issue them within one business day of request. Getting payoff letters from each funder is the first concrete step toward consolidating.
MCA vs. Other Funding Options
The right product depends on your situation. Here is how an MCA compares.
| MCA | Line of Credit | Short-Term Loan | Equipment Financing | |
|---|---|---|---|---|
| Speed to fund | Same day–48 hrs | 3–7 days | 1–5 days | 3–10 days |
| Cost | 1.15–1.5x factor | Prime + 3–8% | 15–40% APR | 8–25% APR |
| Min. credit score | ~500+ | 620+ | 580+ | 550+ |
| Collateral required | None | None | None | Equipment |
| Repayment | Split % or fixed ACH | Draw & repay | Fixed weekly | Fixed monthly |
| Best for | Emergencies, fast capital | Ongoing revolving needs | Planned expenses | Asset purchase |
Qualification Requirements
Basic requirements
- 6+ months in business
- $10,000+ in monthly revenue
- Active business bank account
- U.S.-based business
- Card processing volume (CC split) or total deposit history (ACH)
Documents needed
- 3–6 months business bank statements
- 3–6 months card processing statements (CC split only)
- Valid government-issued ID
- EIN or SSN
- Voided business check
Who Uses Merchant Cash Advances
Any business with consistent revenue — whether card sales or total deposits — and a need for capital quickly, without a long approval process.
Restaurants & Food Service
High daily card volume makes restaurants ideal CC split candidates. Operators use advances for equipment repairs, pre-season inventory, and bridging slow months — with repayment scaling naturally to busy weekends.
Food truck working capital guideTowing & Trucking
Paid by check, ACH, and invoice rather than card swipes — trucking and towing companies are ACH funding candidates. Fast capital for emergency repairs without the week-long wait of traditional financing.
Same-day towing funding guideContractors & Home Services
HVAC, plumbing, and electrical companies collect payment by check, wire, and ACH. ACH funding assesses total deposit volume, making it accessible to trades businesses with minimal card volume.
Revenue-based funding optionsRetail & E-Commerce
Seasonal inventory purchases and marketing pushes are classic MCA use cases. High-card-volume retailers benefit from CC split; mixed-payment retailers from ACH funding.
Get a funding quoteBenefits & Considerations
MCAs fund quickly and require no collateral — but they carry a high cost of capital. Read this before you apply.
Benefits
- CC split payments flex automatically with your revenue
- No collateral or personal guarantee required in most cases
- Qualification based on revenue and deposits, not just credit score
- Same-day to 48-hour funding timeline
- ACH funding considers total deposits — not just card sales
- Renewal available as payment history builds
Considerations
- Higher cost than traditional loans or lines of credit
- Factor rate cost is fixed regardless of payoff speed (unless discount applies)
- ACH daily debits are fixed — no relief on slow days
- Stacking multiple MCAs creates compounding repayment pressure
- Industry is less regulated — terms and quality vary by funder
- Not the right tool for covering recurring operating losses
Frequently Asked Questions
Tools to Run the Numbers Before You Apply
Run the numbers before you apply.
Factor Rate to APR
Convert your factor rate to APR to understand the true annualized cost of the advance.
MCA vs. Term Loan
Side-by-side cost comparison to see if an MCA or a traditional term loan makes more sense.
MCA vs. Line of Credit
Compare repayment structures and total cost between an MCA and a revolving line of credit.
Financial Health Checklist
A 24-point self-assessment to see where your business stands before applying.
CC Split Explained
How holdback repayment works, who it fits, and how it compares to ACH Funding.
Processor Advances
Square, Shopify, Stripe, PayPal, and Toast offers compared — what to check before accepting.
Same-Day MCA Prep
What actually holds up same-day funding — cutoffs, co-owners, bank statement issues, and active positions.
See What Your Business Qualifies For
No hard credit pull. Tell us your monthly revenue and we will match you to the right funding product — MCA, term loan, or line of credit — based on what you actually qualify for.