For crews and parts‑heavy jobs, speed matters. Loans can be cheaper, while MCAs are typically faster and underwrite on deposits. Use this side‑by‑side to choose what fits your cash flow and timeline.
Quick comparison
| Criteria | Merchant Cash Advance | Business Loan / LOC |
|---|---|---|
| Speed to funding | 24-72 hours | 5-20 business days |
| Cost structure | Factor rate (total payback) | Interest/fees (APR) |
| Payments | Daily/weekly or % of card receipts | Monthly amortization (or interest-only LOC) |
| Underwriting | Bank statements, card volume, deposit stability | Financials, DSCR, time in business, credit |
| Best for | Fast inventory/repairs/seasonal gaps | Larger or longer-horizon purchases |
When an MCA fits
- Bank declined or timeline is weeks
- High card revenue or significant card mix
- Short opportunity window (equipment deal, seasonal demand)
When a loan or LOC fits
- Stable DSCR ≥ 1.20–1.25 (varies by lender/product)
- You can wait 2–4 weeks
- Longer horizon purchases with amortization
Early payoff considerations
- MCA: total payback fixed by factor; some providers offer early‑pay discounts—confirm the policy.
- Loan/LOC: prepayment penalties vary; LOC can be repaid anytime, you pay interest on drawn balance.
FAQs
FAQ
Is an MCA a loan?
No. It is typically a purchase of future receivables with remittances tied to card sales or set daily/weekly payments.
What DSCR do lenders look for?
Commonly 1.20-1.25+, but thresholds vary by risk/product; cash-flow programs focus on deposits and variance.
Can I refinance multiple advances?
Yes via consolidation/refi into a single structured payment; avoid stacking new positions on top of existing ones.