MCA vs. SBA Loans: Compare Business Funding
MCA vs. SBA loans — the fastest vs. the cheapest business funding options compared side by side.
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. SBA Loan: SBA 7(a) and 504 loans are government-backed programs offering some of the lowest rates and longest terms available for qualifying small businesses.
Merchant Cash Advance vs. SBA Loan — side by side
| Merchant Cash Advance | SBA Loan | |
|---|---|---|
| Typical amount | $5,000 – $500,000 | $50,000 – $5,000,000 |
| Typical term | 3 – 18 months | 5 – 25 years |
| Rate | 1.10 – 1.50 factor rate | Prime + 2.25% – Prime + 4.75% |
| Minimum time in business | 6 months | 2 years |
| Minimum credit score | 500+ | 650+ |
Which is right for your business?
- Merchant Cash Advance tends to fit best when you need inventory purchases or payroll gaps.
- SBA Loan tends to fit best when you need business acquisition or real estate purchase.
Frequently asked questions
Can I refinance an MCA with an SBA loan?
Yes — SBA 7(a) loans can be used to refinance existing business debt, including MCA balances, when the existing debt is deemed on unreasonable terms. Work with an SBA lender experienced in MCA refinancing, as documentation requirements are specific.
Does having an MCA disqualify me from SBA?
Not automatically, but active MCA balances increase daily payment obligations and reduce cash flow, which impacts debt service coverage calculations. Paying off MCAs before applying for SBA financing typically improves qualification odds significantly.
