Merchant cash advance: plain-English answers
Merchant cash advances are one of the most misunderstood funding products in small business. Here's what they actually are, how the math works, and when they make sense — no hype, no vague marketing copy.
What is a merchant cash advance?
A lump-sum advance repaid as a fixed percentage of daily card sales — not a loan.
MCA vs business loan: what's the real difference?
Loans are cheaper and slower. MCAs are faster, credit-lenient, and materially more expensive.
How do MCA factor rates work (and what's the real APR)?
A 1.30 factor on $50k = $65k payback. Shorter terms make the same factor a higher effective APR.
How do I qualify for a merchant cash advance?
6+ months in business, $10k+ monthly revenue, 500+ credit, clean bank statements.
How much does a merchant cash advance actually cost?
Worked examples: factor × advance, cost of capital, daily debit, and effective APR.
Is a merchant cash advance worth it?
Yes for revenue-generating emergencies. No for long-payback investments — and never stack.
What happens if you default on a merchant cash advance?
The real timeline — ACH bounce, merchant freeze, UCC escalation, COJ, judgment — and the workout window at each stage.
How do I get out of a merchant cash advance?
Five real exits: refinance, consolidate, reconcile, settle, or Subchapter V. Which fits your file.
Are merchant cash advances legal?
Legal in all 50 states — with new disclosure laws in 8 states and post-2019 limits on confessions of judgment.
What is MCA consolidation and does it actually work?
When consolidation buys real breathing room, and when it's just another stack position wearing a nicer label.
How do I refinance a merchant cash advance?
The playbook for trading 40–70% APR daily-debit MCA for 10–30% APR monthly-payment capital.
What do I do if I can't pay my merchant cash advance?
The day-one moves, the five most common mistakes, and when to bring in a real MCA defense attorney.