Cash Flow Finance

Merchant Cash Advance

Fast capital repaid as a percentage of daily sales

What is merchant cash advance?

A merchant cash advance (MCA) provides a lump sum of capital in exchange for a percentage of your future daily credit card, debit card, or bank account sales. It's not technically a loan — it's a purchase of your future receivables. Repayment adjusts automatically with your revenue: you pay more on busy days and less on slow days. MCAs are one of the fastest funding options available (often funded in 1–3 days) but also one of the most expensive forms of business capital, with effective APRs that commonly range from 40–350% depending on the factor rate and repayment speed. Because of this cost, an MCA should typically be a last resort after exploring term loans, lines of credit, invoice factoring, and SBA options — but when speed is critical and other options aren't available, it can keep a business running.

How it works

1

You apply with an MCA provider and share your recent bank statements and/or payment processing history (typically 3–6 months). The provider evaluates your average monthly revenue and daily sales consistency — not your credit score.

2

The provider offers a lump sum based on your average monthly revenue, typically 0.5–1.5x your monthly card or bank deposit volume, along with a factor rate (e.g. 1.2–1.5x) that determines the total repayment amount

3

You receive funds quickly, often within 1–3 business days

4

Repayment happens automatically through one of two methods: a fixed percentage of your daily card sales is deducted by the payment processor (split withholding, typically 10–20% of daily sales), or a fixed daily or weekly amount is debited directly from your bank account (ACH withdrawal). Deductions continue until the full purchased amount (advance × factor rate) is repaid.

Best for

Restaurants, retail stores, and other businesses with high daily credit or debit card volume

eCommerce businesses with consistent daily payment processor deposits

Businesses that need capital in 1–3 days and cannot wait for traditional loan approval timelines

Businesses with lower credit scores (500+) or limited operating history that may not qualify for bank loans, SBA loans, or lines of credit

Seasonal businesses that prefer repayment to flex with revenue — you pay more in peak season and less in slow periods

Requirements

Primary requirementConsistent daily sales volume — either through a card payment processor or as bank deposits. MCA providers underwrite your revenue, not your credit
Time in business6+ months (some providers accept 3+ months with strong daily sales)
Annual revenue$100,000+ (MCA providers typically require minimum monthly revenue of $8K–$10K and look for consistent daily deposit patterns)
Credit score500+ (MCAs have the lowest credit requirements of any business funding product — some providers have no minimum. However, lower scores result in worse factor rates)
Ownership50%+ ownership required by most providers
Key documentsArticles of incorporation, bank statements (3+ mo), government-issued ID
Existing MCAsMany providers will fund businesses with existing MCAs (called "stacking"), but each additional MCA increases cost and risk dramatically. Some providers prohibit stacking. Laminar recommends against stacking in nearly all circumstances

Frequently asked questions

A factor rate is a fixed multiplier (e.g. 1.3x) applied to the advance amount to determine total repayment. Unlike interest, it does not compound — but it also does not decrease if you repay early. A $200K advance at a 1.3x factor rate means you repay $260K total, regardless of how quickly you repay. This is the critical difference: with an interest-bearing loan, early repayment saves you money because you stop accruing interest. With a factor rate, the total repayment amount is locked in from day one. Because MCAs repay over short periods (typically 6–18 months), the effective APR is extremely high — commonly 40–350%. The shorter the repayment period, the higher the effective APR, because the same fixed cost is compressed into less time. Always convert factor rates to effective APR before comparing an MCA to any other financing option.
An MCA's cost is determined by the factor rate multiplied by the advance amount. At a 1.5x factor rate on a $200K advance, total repayment is $300K — meaning the cost of capital is $100,000. If a broker arranged the MCA, an additional 1–3% broker fee may apply. Effective APR depends entirely on repayment speed: if you repay the $300K over 12 months, the effective APR is roughly 80–100%. If your daily sales are strong and you repay in 6 months, the effective APR can exceed 200–350% — you pay the same $100,000 in half the time. This is why MCAs are the most expensive form of business capital and should be considered only after exploring other options.
In most cases, no. Because the total repayment amount is determined by the factor rate at the time of the advance — not by accruing interest — paying early does not reduce what you owe. You repay the full purchased amount ($200K × 1.5x = $300K) regardless of whether it takes 6 months or 12 months. Some providers offer a small discount for early payoff, but this is not standard. This is the single biggest difference between an MCA and a traditional loan, and it's the reason effective APR increases the faster you repay — you're paying the same fixed cost in a compressed timeframe.
The holdback percentage typically ranges from 10–20% of daily card sales (for split withholding) or a fixed daily ACH debit amount calculated to repay the advance within the expected term. A higher holdback percentage means faster repayment — which sounds good but actually increases your effective APR because the fixed factor rate cost is compressed into a shorter period. It also puts more pressure on daily cash flow. When comparing MCA offers, pay attention to the holdback percentage alongside the factor rate — a lower factor rate with a high holdback can be more disruptive to your operations than a slightly higher factor rate with a lower holdback.
Legally, no. An MCA is structured as a purchase of future receivables, not a loan. This distinction matters because MCAs are not subject to the same state and federal lending regulations that govern business loans — including usury laws that cap interest rates, Truth in Lending Act disclosures, and certain borrower protections. This is why MCA providers can charge effective APRs that would be illegal for a traditional loan in many states. Several states are beginning to require disclosure of equivalent APR and total cost of capital on MCAs, but regulation remains inconsistent.
Technically yes — this is called "stacking," and some MCA providers will fund businesses that already have an active advance. However, stacking is extremely dangerous. Each additional MCA adds another daily deduction from your sales, which can quickly consume 30–50% or more of daily revenue and create a cash flow crisis worse than the one the MCA was meant to solve. Stacking is one of the most common paths to business failure in MCA lending. Laminar strongly discourages stacking and can help you find consolidation or refinancing options if you already have multiple MCAs.

MCA Cost Calculator

See the true cost of an MCA and what Laminar can save you.

Cost Breakdown

Factor cost$75,000
Broker fee$15,000
Document gathering$200
Application submissions$400
Lender back-and-forth$400
Wrong product risk (0.0%)$0
Total repayable$325,000
Total cost of borrowing$91,000
Laminar saves you
$15,800

17.4% of total cost. No broker fees, no app-by-app submissions, no wrong-product risk.

Owner time valued at $50/hr. Actual costs vary.