MCA vs. Working Capital Loans: Compare Business Funding
MCA vs. working capital loans — two common fast-funding options compared on cost, speed, and repayment flexibility.
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. Working Capital Loan: A working capital loan covers day-to-day operational expenses — payroll, rent, supplies — giving businesses the cash flow cushion they need to operate smoothly.
Merchant Cash Advance vs. Working Capital Loan — side by side
| Merchant Cash Advance | Working Capital Loan | |
|---|---|---|
| Typical amount | $5,000 – $500,000 | $10,000 – $500,000 |
| Typical term | 3 – 18 months | 6 – 36 months |
| Rate | 1.10 – 1.50 factor rate | 10% – 40% APR |
| Minimum time in business | 6 months | 6 months |
| Minimum credit score | 500+ | 550+ |
Which is right for your business?
- Merchant Cash Advance tends to fit best when you need inventory purchases or payroll gaps.
- Working Capital Loan tends to fit best when you need payroll or rent.
Frequently asked questions
When should I choose an MCA over other working capital options?
Choose an MCA when: (1) you need funds in under 48 hours, (2) your credit or history prevents qualification for other products, or (3) your revenue is highly variable and you need repayment to flex with cash flow. In all other cases, pursue the cheapest working capital product you qualify for.
