Commercial Real Estate vs. MCA: Compare Business Funding
CRE loans vs. merchant cash advance — understand the differences in cost, purpose, and use case before choosing.
Commercial Real Estate Loan: Commercial real estate loans finance the purchase, renovation, or refinance of income-producing or owner-occupied commercial property. Merchant Cash Advance: A merchant cash advance delivers a lump-sum advance against your future credit card or daily revenue, repaid as a fixed percentage of daily sales.
Commercial Real Estate Loan vs. Merchant Cash Advance — side by side
| Commercial Real Estate Loan | Merchant Cash Advance | |
|---|---|---|
| Typical amount | $250,000 – $25,000,000 | $5,000 – $500,000 |
| Typical term | 5 – 30 years | 3 – 18 months |
| Rate | 6% – 12% APR | 1.10 – 1.50 factor rate |
| Minimum time in business | 2 years | 6 months |
| Minimum credit score | 650+ | 500+ |
Which is right for your business?
- Commercial Real Estate Loan tends to fit best when you need purchase or renovation.
- Merchant Cash Advance tends to fit best when you need inventory purchases or payroll gaps.
Frequently asked questions
Can I use CRE equity instead of taking an MCA?
Yes — if you own commercial property with equity, a cash-out refinance or CELOC provides capital at 5–9% versus the 40–200%+ effective cost of an MCA. The trade-off is time: real estate refinancing takes 30–60 days while an MCA funds in days.
Do CRE lenders look at MCA balances?
Yes. Outstanding MCA balances show in bank statement analysis and increase daily payment obligations, reducing available cash flow for DSCR calculations. Pay off MCA positions before applying for CRE financing whenever possible.
