How to Get Merchant Cash Advance Same Day Funding: A Comprehensive Guide

Business Guides

Jacques Famy Jr
Review By Todd Millman

There’s a major problem with traditional business loans: depending on the documents you need to submit and the lender you work with, processing and receiving your funds can be anywhere from a few weeks to a few months. The U.S. Small Business Association has a number of detailed steps in the “life” of an SBA loan — and a majority of these steps occur before the funds are ever disbursed.

Ultimately, a traditional business loan isn't a great option when you can’t wait weeks for funding. 

For small businesses that need cash immediately, a merchant cash advance (MCA) is a better choice than traditional bank loans. Successfully receiving a MCA on the same day requires you to understand the application process and funding terms. In this in-depth guide, you’ll discover the ins and outs of a MCA, how it works, and how you can use it to receive business cash on the same day.

What Is a Merchant Cash Advance?

A merchant cash advance is usually called a loan. But, technically, it’s a business cash advance based on the volume of your revenue. A merchant cash advance product allows small business owners to get an upfront lump sum, based on their revenue and creditworthiness, then repay it with a percentage of their future sales, initiating an automated repayment process.

MCAs are excellent for businesses with substantial credit card receipts, allowing them to quickly handle cash-flux or emergencies. You can also get an MCA if your small business has a cash emergency and needs business funding on the same day. Your business gets a cash advance, and then the provider extracts a proportion, or repayment amount, from your daily or weekly credit card transactions. This repayment process happens automatically.

However, if your small business does not accept credit cards, you will not be eligible for a MCA but you can get a business cash advance based on overall sales for those business who don't except credit cards.

  • MCAs are a quick solution for short-term cash flow challenges.
  • These types of “business loans” are categorized as " Business Funding" and NOT a loan, with repayments based on future sales.
  • Due to the accessibility and straightforward nature of these advances, if the data on your business's performance and/or credit card sales suggests good creditworthiness, you can receive business funding within a day.
What Is a Merchant Cash Advance?

That being said, MCAs are a quick solution that can help tide over a short-term cash flow issue. That’s why these types of “business loans” fall within the category of short-term loan financing options, similar to a line of credit or term loans. 

And because of the short-term, simplified nature of the loan, the approval is also pretty straightforward. If you meet the requirements, you can get business funding on the same day or within one or two days.

Important Insights for Businesses on Merchant Cash Advance (MCA)

MCA's are costly. Despite the advantage of an Merchant Cash Advance and its flexible usage, it should be considered as a lifeline during a business emergency rather than a regular financial resource. Making a habit out of getting MCAs can impede your business growth for short-term cash.

Secondly, MCA's can be expensive due to the factor rate that functions as a multiplier of your principal advance.

Let's look at an example of how this works.

If you get an MCA for $100,000 with a 1.25 factor rate, the payback amount you need to repay is $125,000. The paperwork will display that it's calculated by multiplying your principal, $100,000, with a factor rate of 1.25.

The factor amount and the resulting daily payback amount heavily rely on your business sales. If you have high business revenue, being a qualified borrower, you can negotiate a lower factor rate, which would reduce your daily payments.

However, with MCAs, while low paperwork demands may appeal to many, their credit analysis and loan application doesn’t solely depend on your credit score – instead, they assess a borrower's eligibility based on credit card sales or overall revenue volume. So it’s an ideal option for owners with a low credit score who still need a Merchant Cash Advance for quick funding.

And, remember: your small business loan will cost you less if you have better credit.

Types of Merchant Cash Advance Programs

The MCA industry has evolved since its initial start. Nowadays, you can choose from various MCA programs. Here are five of the most popular merchant cash advance programs.

Standard Cash AdvanceA lump sum delivered to your business bank account. The lump sum has a factor rate, and you will have to pay it back through a fixed percentage of your future sales with either daily or weekly payments.
Consolidation and BuyoutsLump sums used to pay off current debts. The merchant cash provider buys out or consolidates your other loans. This allows you to make a single payment to one merchant instead of different lenders.
Reverse ConsolidationHelps you pay off debts when they become too numerous, but it’s different from a standard consolidation or buyout. The merchant cash provider gives you enough cash to pay your monthly debts and retains some of the money for their repayment. By paying out your other lenders every month, your debt decreases until only the MCA provider remains. This type of MCA program is completed over an extended period of time — usually six months or more.
Installment FundingA MCA provided in different installments. The MCA provider might initially give you half of the money upfront, and then you get the rest in two other payments of 25%. This ensures that you receive the money you need to solve your cash flow issues, while the MCA lender doesn’t have to worry about the risk of you defaulting on the entire business loan.
Credit Card SplitsOptions if you complete most of your business transactions through credit cards instead of a lockbox processor. Your merchant processing account is linked to the merchant advance provider, and a percentage of your sales is deposited in the merchant's account every month. If you have a good sales month, the MCA provider receives a larger amount of money and vice versa.
A comparison of the Types of Merchant Cash Advance Programs.

Pros of Securing a Merchant Cash Advance

Because merchant cash advances are more expensive than a traditional business loan, as a business owner, you need to know what the advantages are so you can decide if the cost is worth it. After all, many financing options and small business loans can provide similar amounts of money with lower interest rates.

But, it’s not just about ease and speed: what merchant cash advances truly offer is flexibility, which can be invaluable if business owners are hit with certain situations. 

Let's consider some of the advantages of these short-term financing options.

#1: Instant Merchant Cash Advance—Get Quick Access to Cash

One of the most significant selling points for MCA is how immediately your business cash is disbursed. Your Advancepoint Capital account executive, as MCA advisors, manage all the paperwork, ensuring that the money hits your bank account the same day or within a one day timeline. This rapid disbursement, generally far quicker than traditional website-based borrowing methods like credit lines, is especially beneficial when your business demands immediate finance to offset debts or purchase essential equipment. Traditional loans may consume weeks or even months to finalize, a timeline that may not align with your critical needs.

#2: Experience Flexible Repayment Terms With MCA Lenders

A MCA is directly tied to your volume of sales. This nifty financial tool, often aptly described as a lifesaver for businesses, could help avoid unnecessary layoffs or furloughs. With MCA, you pay off a percentage of your daily, weekly, or monthly revenue. Thus, in a slower business month, your payable MCA loan amount decreases. Other types of business funding have fixed repayment schedules, which demand a certain payback amount regardless of business performance. In times of temporary revenue fluctuations, having an MCA could ensure you manage to meet your commercial rent obligations timely and protect your margins of profit.

#3: Acquire MCA Loans Even With Bad Credit

Many loan types require a good personal credit score as part of their eligibility criteria. Personal FICO credit scores and other credit scores are used to represent the creditworthiness of a person and they often play a crucial role in determining financing eligibility. Those with low credit scores usually cannot get traditional or long-term financing, so they have to resort to other options.

MCA's are determined by a company's creditworthiness, future sales, past debit card and credit card sales, and are one of the best options to offset a lower credit score. They are a great financing option, especially for companies looking to borrow to expand their operating capacity or even to meet obligations like rent payments without depleting their reserves. Most importantly, they do not require you to have a high personal or business credit score to be eligible for funding.

#4: Spend the Money According to Your Business Needs

With traditional funding, a bank or other loan provider will ask you to specify what you’ll do with the loan you receive. You need to detail what you want the money for, whether it’s to pay back other debts, purchase equipment, or some other purpose.

With MCA's, you don’t need to provide a reason or state that you’ll use the money for a specific purpose. You can simply say that you want to meet your business needs, and there will be no further inquiry about where your funding is going.

Advantage #5: No Collateral—Advantages of Bad Credit Business Cash Advance

While there are different loans that you can apply for with no collateral required, many will ask for bank statements, credit scores, and detailed financial documents to account for risk evaluation. But the nature of merchant cash advances is different — so they require minimal documentation and have zero personal collateral requirements.

Potential Cons of Merchant Cash Advance: A Comprehensive Overview

As with every type of funding, there are pros and cons. Merchant cash advances can help you meet your business needs quickly and without stringent requirements, but let's look at some of the potential limitations you should consider when trying to evaluate if this option is right for you.

#1: MCA Loans Could Pose Expensive Funding

Costs for merchant cash advances can be significant. How much you’ll have to repay in total depends on what factor rate they charge you. Even a low factor rate means you might need to pay back 35% more than what you borrowed. In some cases, you could end up paying between 70% to 200% more.

#2: Risk of Hurting Your Business Cash Flow

When you get this type of funding, you will need to make daily or weekly payments. If you're short on cash already, the merchant cash advance can be helpful upfront, but it might hurt you in the long run.

Before getting an MCA, consider how it will affect your business. Make sure you have a plan in place to manage your cash flow when a percentage of your sales revenue is automatically going toward repayment.

#3: Lack of Contribution towards Building Business Credit

Merchant cash advance providers are not required to report your payment history to business credit bureaus because, technically, an MCA is not a loan. That means that when you're paying back an MCA, you aren't building up your official business credit.

If you’re a start-up, you should aim to build better credit. Doing this will open up doors to more funding avenues when you start to grow and scale.

Identifying the Right Time for Your Business to Secure a Merchant Cash Advance

Now that you understand the advantages and disadvantages of getting an MCA, you might wonder when it can be a practical funding choice. Many use cases justify getting an MCA in 24 hours, so let's look at a few of those situations.

  • Help with temporary cash flow issues — MCAs help you solve your cash flow problems fast by providing funding in 24 hours or 48 hours.
  • Purchase inventory at a huge discount — There might be a huge sale on inventory you need, and you don't have cash! An MCA can help you get the money you need so you save on your purchases.
  • Unplanned expenses — Business can be unpredictable, and you might be facing an unexpected expense while being strapped for cash. The MCA will help you get that cash fast, especially if you are out of other funding options.
  • Paying other debts due — If you have taken out another loan and your payments are coming due, getting a merchant cash advance can help you meet payment deadlines.
  • Working capital — You might have a large business order coming in and need more working capital to meet it. You should get an MCA to help you with funding so you can increase your capacity.

The bottom line is, as a business owner, you should evaluate the benefits of getting fast cash through an MCA and the cost of having to pay it back.

How to Secure a Merchant Cash Advance from Direct Lenders on the Same Day?

When it comes to short-term loans and funding, traditional banks and lenders may not be much help. Often, they drain your cash reserves with their extensive documentation requirement, do not cater to businesses with bad credit, and lengthen your wait for approval. For same-day approval, opt for the comfort of unconventional portals like online merchant cash advance providers, brokers, independent sales organizations or alternative lenders. They usually offer a simple application process, overlook bad credit histories, and rent out your required merchant cash advance (MCA) within a day.

Most common entities offering Merchant Cash Advance with same day funding

  • Merchant Cash Advance Funders
  • Business Funding Brokers
  • Online Business Lenders
  • Alternative Lenders
  • Independent Sales Organizations (iso's)

Now, even though you may be in a rush to help avoid potential layoffs or even just to pay your rent, take a moment to look around at the providers. Different MCA providers will have different conditions, primarily around factor rates and repayment terms. Spare some time to read through the reviews of particular lenders and carefully examine the terms and conditions of your MCA, ensuring you deal with a reputable provider.

How to Apply for a Merchant Cash Advance?

If you've been in business for a few months and find yourself in need of quick business cash — but you have bad credit — you should consider applying for a merchant cash advance. Applying for a short-term merchant cash advance is easier than applying for other business loans.

You won't need a lot of documents or collateral, and if everything is in order, you should get your money on the same day or within 48 hours.

Once you've identified a few credible merchant cash advance companies and picked one that you want to apply through, here is the process you should follow.

Step #1: Check Your Eligibility for Business Cash Advances with Bad Credit

Every merchant cash provider will have its own eligibility criteria, but you will find similarities, too. Most providers do not require you to have several years of business history. A few months to one year of running your business will suffice.

They will look at the volume of transactions on your credit card or overall revenue to determine your factor rate more than anything else. If you meet the required volume and/or process transactions via credit card, you should be good to apply.

Step #2: Understand the Impact of Your Credit Score on MCA Loans

While most merchant cash advance providers don't place emphasis on your credit score, they will usually want to see a minimum score. Look at what score you have, and if it's greater than 550, you probably will be able to get started with the application process. Below 550, it still may be worth applying as there is an MCA program with no personal credit check, but has stringent requirements otherwise.

Keep in mind that a personal credit score of less than 550 might make it challenging to secure any type of business financing – but it’s definitely not impossible. Check out our guide to learn more about how to get a small business loan with “bad” credit.

Step #3. Assemble Your Supporting Documents

Once you start your online application, you will have to input your personal and business information, as well as upload any supporting documents such as:

  • Your personal and business bank statements for the last few months
  • Your business's bank information
  • Proof that you have been in business for at least a few months
  • Proof of your annual gross sales

These documents will provide the necessary information to the MCA provider, and if everything is in order, you will get approval within a few hours.

Step #4. Understand the Terms and Conditions of MCA Lender

If your merchant cash advance is approved, you will receive the terms and conditions. Before immediately signing up for the MCA to receive funding, take a look at the terms and conditions and specifically focus on:

  • Payment frequency: how often will you have to repay your debt as a percentage of your revenues, which could be daily, weekly, or monthly.
  • Factor rate: what interest rate or factor rate are you agreeing to, so how much money do you have to repay by the end of your agreement?
  • Penalties: what monetary penalties will you incur if you miss a payment or default on your MCA loan?
  • Time to funding: if you agree to receive the MCA, how long will it take for the money to get into your business bank account?
Reading the Terms and Conditions of MCA Application

If your factor rate is exceptionally high, such as 1.75, and you have to repay an additional 75% of what you received, try to look at other providers. Depending on your bank statements and revenue, you might be able to get funded with a lower factor rate.

Step #5. Lock the Contract and Obtain Same Day Funding

After you've read the terms and conditions of your merchant cash advance, you can decide if you want to sign your agreement or reject the offer. If the conditions are favorable, you can sign the MCA agreement and wait for your funds to be deposited.

How Much Does a Merchant Cash Advance Cost?

A merchant cash advance is an excellent way to get fast funding, but it can end up costing a lot more than you imagined. The cost of your merchant cash advance depends on your factor rate and repayment frequency.

If you have a low factor rate and frequent payments, you can quickly pay off the advance without it hurting your business’s cash flow.

To understand how much MCA financing will cost you, let's explore an example.

An Example to Understand Merchant Cash Advance Costs

Assume that you get a merchant cash advance of $75,000, and the provider quotes you a 1.28 factor rate. This means that you will be paying 28% more than what you borrowed, which comes to $96,000.

$75,000 X 1.28 factor rate = $96,000 total repayment

You will be repaying $21,000 more than what you received over a specific period of time.

Let's now assume that you have a revenue of $100,000 per month, which is around $3,333* per day.

*$100,000 in revenue /30 days= $3,333 revenue per day

If the merchant cash advance provider wants you to pay 15% of your monthly revenue to repay the advance, also called a holdback rate, you will have to pay $500* every day for 192 days or if its a weekly payment lets say $2,400 over 40 weeks.

*$3,333 per day X 15% payment = $500 in daily payments

$96,000 total payment / $500 daily payment = 192 days to repay your MCA

OR Weekly Option

$96,000 total repayment / $2,400 weekly payment = 40 weeks to repay your MCA

The advantage of this type of payment is that your payments will adjust if you have a lower amount of revenue due to the 15% of future sales split for repayment. For example, if you only make $3,000 in revenue on a single day, then your payment will be adjusted to $450 daily. These variations will then affect how long you will have to repay your MCA.

How to Repay a Merchant Cash Advance?

When business owners take out a merchant cash advance, they might assume it's similar to repaying other types of loans or lines of credit. In fact, it's pretty different!

Based on the agreed factor rate and holdback rate, your provider will make daily or weekly debits from your credit card transactions. This means that every day, a percentage of your revenue for the day will be transferred automatically to your MCA provider until you have paid the advance in full.

While other types of loans or lines of credit may have a grace period, which is the time between when you get the funds and when you start paying back the loan, merchant cash advances do not offer this cushion. That means repayment kicks in the day after you receive your business cash.

Types Of Merchant Cash Advance Repayment Structures

Any business owner who takes out a merchant cash advance has a few ways to repay it. Here are the top three ways you can repay your financing from a merchant cash advance.

1. ACH Withdrawals

Automated Clearing House (ACH) withdrawals are the standard way of repaying your MCA. These can be fixed payments, are consider "convenience payments" where the MCA provider offer's a fixed amount of money every day or week without considering any changes to your sales, still giving you at the end of every month the ability to request reconciliation of your monthly revenue verses the set fixed percentage (holdback percentage) of future receivables for repayment outlined in your MCA agreement, which could trigger a refund if sales have dropped from your average level.

An ACH withdrawal can also be variable. In that case, you’ll pay a percentage of your credit card sales, and the payments change depending on your transactions.

2. Split Payments Processing

Split payments processing is one of the easiest ways of repaying your merchant cash advance because it's completely automated. The way it works is that your MCA provider teams up with your payments processor or asks you to switch to a particular processor.

Every time you make a sale, the processor deducts the merchant advance provider's payment and sends you the remainder.

For example, if one of your customers makes a payment of $1,000 and you have a merchant advance with a 15% holdback rate, your processor will hold $150 to send to your advance provider and send you $850.

Although it's one of the most convenient options for paying back a merchant cash advance, it can limit your payment processor choices. You could end up with a low-quality processor, depending on what company your MCA provider partners with.

3. Lock Box Withholding

With this type of repayment structure, the merchant cash provider will set up a special bank account, or a “lockbox,” in your name. However, they control it. You will have to route all your sales to this lockbox. Every day or week, you will leave the percentage owed to the provider in the lockbox and transfer your portion to your business account.

Lockbox withholding agreements are less common and have a lot of room for error and conflict. You will have to give complete control of your sales to another company, which can pose many problems for you as a business owner.

Additionally, delays with transfers can affect your cash flow. That might leave you vulnerable to a cash shortage as you repay your advance.

What Happens if You Cannot Repay Your Merchant Cash Advance?

Once you get a merchant cash advance, you must repay it in full. An inability to pay your MCA leads to you defaulting on your advance. Most MCA providers will have a term in their contract that allows them to pursue your business or personal assets if you cannot pay your advance.

Additionally, while MCA providers do not report your payments to credit bureaus to build credit, they will report a default. A default on your credit report will make it difficult for you to seek out other financing avenues in the future.

Suggestions on How to Avoid Default: Insider Tip's

  • Always maintain an open line of communication with your funder if you are having cash flow issues and struggling to make payments.
  • Call your Funder BEFORE you bounce a payments.
  • Advise your funder when you are switching banks or merchant processors and provide necessary documentation to funder to switch re-payment processes.
  • Ask for payment relief or a reduction in holdback percentage to compensate for cash flow issues from your MCA Funder.
  • Always be willing to re-negotiate the repayment terms with MCA provider.
  • NEVER avoid email, text, phone calls or written correspondence from you MCA Funder.

Tips for Using a Merchant Cash Advance Wisely

  • Evaluate your Needs verses Costs- Due to the higher cost of merchant cash advance it's always important to way the costs verses the benefit of acquiring business funding through a merchant cash advance. Always ask your self the value the business funding will be and the return on the investment.
  • Evaluate Repayment Terms- With a merchant cash advance, the payments are based on future credit card sales. Make sure you calculate what percentage of monthly sales are going to repay the merchant cash advance and make sure you are comfortable with how much of your overall gross is going to repay the advance. If its more than 15% of monthly gross sales you may want to reconsider.
  • Monitor your future sales against payments- What the merchant cash advance company is taking in payments needs to be reconciled with your monthly gross sales. Merchant cash advances have a set percentage of monthly sales and if the funder took too much your entitled to a charge back.


Different from other business loans, merchant cash advances allow you to get quick financing so you can solve cash flow issues, purchase inventory, or increase your working capital. Especially in industries such as retail, businesses can utilize an MCA to cover pressing outlays like payroll or the procurement of new stocks without tapping into their reserves. However, this appealing speed in funding comes at a steep price - a reality very often underscored by financial advisors.

Before you get an MCA, it's advisable to explore other types of business loans or lines of credit. If you’ve had to deal with an unexpected downturn in your cash flow, our advisors can guide you to consider a wealth of other funding types geared to aid your business growth. Advance Point Capital, is more than just a portal for loans. We are a small business funding marketplace where a dedicated account executive expedites the paperwork and helps you secure a business loan in as little as 24 hours.

We've been trusted with over $375 million in business loans and funding distributed to more than 7,500 small businesses, with favorable loan terms. Let us help you ease your cash flow problems - call us today or get a quote on our website. Secure your business's state of solvency with a provider you can trust!

Jacques Famy Jr

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