How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
Here are 6 merchant cash advance companies
| Lender | NerdWallet Rating▼ | Max loan amount▼ | Min. credit score▼ | Next steps |
|---|---|---|---|---|
Expansion Capital Group Merchant Cash Advance with Fundera by NerdWallet | Best for Borrowers with bad credit | $300,000 | 500 | with Fundera by NerdWallet |
Fora Financial Revenue Advance with Fundera by NerdWallet | Best for Startups | $1,500,000 | 570 | with Fundera by NerdWallet |
Libertas Funding Revenue-Based Advance with Fundera by NerdWallet | Best for Established businesses | $5,000,000 | 650 | with Fundera by NerdWallet |
Giggle Finance Merchant Cash Advance with Fundera by NerdWallet | Best for Self-employed individuals | $5,000 | 300 | with Fundera by NerdWallet |
Credibly Merchant Cash Advance | Best for Low starting factor rates | $600,000 | 500 | |
Reliant Funding Merchant Cash Advance | Best for Limited revenue | $400,000 | 525 | |
Here are 6 merchant cash advance companies
Best for Borrowers with bad credit
Best for Startups
Best for Established businesses
Best for Self-employed individuals
Best for Low starting factor rates
Credibly
Max Amount
$600,000
Min. Credit Score
500
Best for Limited revenue
Reliant Funding
Max Amount
$400,000
Min. Credit Score
525
I'M INTERESTED IN:
Our pick for
Borrowers with bad credit
Expansion Capital Group provides funding to borrowers with a minimum credit score of 500 or higher.
Expansion Capital Group Merchant Cash Advance
with Fundera by NerdWallet
Max Loan Amount
$300,000
Min. credit score
500
Expansion Capital Group can provide fast and easy financing for newer businesses and borrowers with bad credit.
Max loan
$300,000
Min. Credit score
500
with Fundera by NerdWallet
Our pick for
Startups
To qualify for a revenue advance from Fora Financial, you need a minimum of only six months in business.
Fora Financial Revenue Advance
Max Loan Amount
$1,500,000
Min. credit score
570
Fora Financial has flexible qualification requirements and can offer large advance amounts.
Max loan
$1,500,000
Min. Credit score
570
Our pick for
Established businesses
Libertas Funding requires that you have good credit and strong annual revenue to qualify.
Libertas Funding Revenue-Based Advance
with Fundera by NerdWallet
Max Loan Amount
$5,000,000
Min. credit score
650
Libertas can offer same-day funding for borrowers with good credit and strong business revenue.
Max loan
$5,000,000
Min. Credit score
650
with Fundera by NerdWallet
Our pick for
Self-employed individuals
Giggle Finance offers fast funding designed specifically for freelancers, contractors, online sellers and other self-employed individuals.
Giggle Finance Merchant Cash Advance
with Fundera by NerdWallet
Max Loan Amount
$5,000
Min. credit score
300
Giggle Finance provides capital to freelancers, contractors and self-employed individuals.
Max loan
$5,000
Min. Credit score
300
with Fundera by NerdWallet
Our pick for
Low starting factor rates
Credibly offers factor rates on its merchant cash advances that start as low as 1.11.
Credibly Merchant Cash Advance
Max Loan Amount
$600,000
Min. credit score
500
Credibly offers fast, flexible funding with low starting factor rates.
Max loan
$600,000
Min. Credit score
500
Our pick for
Limited revenue
You may be able to qualify for an MCA from Reliant Funding with a minimum of $5,000 in monthly revenue.
Reliant Funding Merchant Cash Advance
Max Loan Amount
$400,000
Min. credit score
525
You may be able to qualify for next-day funding from Reliant, even with bad credit or limited revenue.
Max loan
$400,000
Min. Credit score
525
How to choose a merchant cash advance company
If you’re looking for a merchant cash advance, you’ll want to research and vet several companies before deciding which one is right for your business.
Some merchant cash advance companies have been criticized for confusing contracts and misleading sales tactics — leading businesses to fall victim to predatory lenders and cycles of expensive debt that are difficult to break.
Although some states have taken legal action to require transparency from MCA companies in recent years, bad actors still try to take advantage of business owners, promising things like “guaranteed approval” or “business loans with no credit check.”
Not all merchant cash advance companies are predatory, but it’s still important to watch for red flags — and look elsewhere if an offer doesn’t seem right.
As you compare MCA providers, consider these factors:
Funding availability
Merchant cash advance companies will have different maximum funding amounts. You should confirm that the provider’s requirements are in line with what you’re looking for. Some MCA companies also offer other more traditional types of financing like term loans and lines of credit. If you think you might be able to qualify for other options, you might explore those as well.
Costs of borrowing
MCAs are one of the most expensive forms of business financing with APRs that can potentially reach 350%. MCA companies charge fees as factor rates instead of annual percentage rates or simple interest rates which can make it more difficult to understand borrowing costs.
You can translate a factor rate into an APR by using an MCA calculator. Also, ask the merchant cash advance company if it charges additional fees — like underwriting fees or setup fees, for example — and include those in your APR calculations as well.
Repayment options
Automatic deductions from your debit and credit card sales or withdrawals from your business bank account are your typical repayment options. If you have a preference, confirm that the option is offered by the provider.
Providers often require daily or weekly repayments, but in some cases you may find a provider that offers biweekly or monthly repayments or l will let you choose a frequency that works best for your business.
Qualification requirements
Compared with more traditional small-business lenders, merchant cash advance companies typically have flexible eligibility requirements. These companies will consider your personal credit score, time in business and annual revenue — but they’ll often be willing to work with startups and businesses facing credit challenges.
Many companies will also prioritize your debit and credit card sales or monthly bank activity when underwriting your application because you’ll be using your sales to repay your advance. Typically, the stronger your credentials, the lower the factor rate you’ll receive on funding.
Speed and application process
Most MCA companies offer simple applications with minimal documentation. You can usually apply and receive funding within a few business days. Some providers offer dedicated account managers to walk you through the process, which could be helpful if you prefer a more personalized experience.
Transparency and lender reputation
You’ll want to look for a merchant cash advance company that is upfront about its products and the way they work. Ideally, the company offers multiple ways for you to contact customer service — and you receive straightforward answers to your questions.
If you receive an MCA agreement from a provider, it should clearly lay out terms and conditions, fees and repayment information. In addition to talking to the company, reading reviews and reaching out to other business owners can help you verify the reputation and reliability of a merchant cash advance company.
Confession of judgment
Many MCA companies request or require you to sign a confession of judgment at closing, which is an agreement that allows an MCA company to file a judgment against you in court without letting you know. If you can, find out if your MCA company requires this document before you move forward with an application. If it is a requirement, that alone may be a reason to look elsewhere.
🤓 Nerdy Tip
Merchant cash advances are also referred to as business cash advances and business payday loans.What is a merchant cash advance?
A merchant cash advance is an alternative form of business financing based on a business’s credit and debit card sales. Monthly card sales are a major factor used by MCA companies to determine the amount of cash advances given to a business. Also, the repayment of advances is often set up as deductions from the business’s card sales.
How does a merchant cash advance work?
A merchant cash advance company offers a lump sum of money — called a merchant cash advance — to businesses in exchange for a portion of their future sales revenue. Advances can range from a few thousand dollars to $5 million or more.
Borrowers are typically set up for automatic repayments through a percentage of their debit and credit card sales or withdrawals from their business bank account. These payments are typically made daily or weekly, but, in some cases, may be biweekly or monthly, depending on your business and the MCA company.
MCA companies charge a factor rate instead of an interest rate. For example, an advance of $50,000 with a factor rate of 1.2 would require a total repayment of $60,000 ($50,000 x 1.2 = $60,000).
In addition to a factor rate, you may also pay charges such as underwriting, administration, setup or service fees. And some MCA lenders — Fora Financial and Libertas Funding, for example — offer prepayment discounts if you repay the advance early.
Term lengths vary by lender, but generally run from three to 24 months. And, in some cases, the MCA company may advance you additional funds if you’ve paid off a portion of the original advance.
Where to get a merchant cash advance
There are companies that specialize only in MCA products while others offer it in addition to other types of lending options.
Merchant cash advance companies
Some companies simply focus on offering MCA products, as is the case with Expansion Capital Group and Giggle Finance. While these companies often work with a variety of small businesses, there are some types of businesses they won’t work with. And other MCA companies may choose to offer their services to specific groups. For example, Giggle Finance offers its services to independent contractors and self-employed individuals.
🤓 Nerdy Tip
Reputable MCA companies are transparent about how their products work. This includes being upfront about the factor rate you will receive, additional fees they charge and repayment requirements for the advance. You shouldn’t feel pressured to sign an MCA agreement, especially if you don’t have a clear understanding of your obligations under the contract.Online lenders
Some online lenders offer MCA as well as other traditional lending products such as long-term loans, business lines of credit, SBA loans and equipment financing. Credibly is an example of a lender that offers business loans in addition to alternative forms of financing such as MCA and invoice factoring.
Alternatives to merchant cash advance companies
It’s worth exploring other options besides merchant cash advances, which can include:
If you need fast financing, or are struggling to qualify for a loan because of credit challenges, online loans may be a better option than MCA financing. These short-term loans will have a set repayment period, and although they may require frequent payments, they won’t come directly from your debit and credit card sales.
Online term loans may also have a lower overall cost than MCAs and many lenders have reasonable time-in-business requirements, in addition to credit score requirements.
» MORE: Best short-term business loans
If your primary need is revolving funding, you may consider a business line of credit before applying for an MCA. With a business line of credit, you only pay interest on the funds you use, similar to a credit card.
A business credit line can be useful for covering working capital needs, without requiring daily or weekly payments directly from your sales, like an MCA. Online lenders Headway Capital and Fundbox, for example, both offer lines of credit with flexible qualification requirements, like a minimum time in business of six months.
Business credit cards can be easier to get than a business loan because time in business is typically more flexible for qualification. They can give you access to cash while you build your time in business and your business credit history. Like a business line of credit, you can use the card to make purchases necessary for your business.
While business credit cards can have higher APRs than business loans, they would typically be more competitive than MCAs. Also, they often offer ongoing rewards and other benefits to the cardholder. Payments are typically made monthly and don't involve automatic deductions from your debit and credit card sales.
Business-to-business companies that are struggling to qualify for other loan options might consider invoice factoring.
Invoice factoring allows you to sell your unpaid invoices to a factoring company at a discount. You receive an advance of cash (up to 90% of the value of your invoices) and the factoring company takes responsibility for collecting repayment from your customers. Once your customers have paid, the factoring company sends you the difference, minus the agreed-upon fees.
Because factoring companies prioritize the value of your invoices and creditworthiness of your customers when evaluating your application, invoice factoring can be easier to qualify for than more traditional loan options, even if you’re a new business or have poor credit.
If your business is growing and you have time to plan ahead for funding, you might consider looking for small-business grants. Unlike merchant cash advances and other types of debt financing, business grants are a free source of funding that doesn’t need to be repaid.
These grants can come from the federal or local government, large corporations or local initiatives. They can be used to start a business, in the event of an economic hardship or to fund businesses in underserved markets, like women-owned businesses or minority-owned businesses.
How to improve your chances of getting traditional financing
Review your credit history
Reviewing your personal and business credit reports for accuracy and then removing errors or outdated information that may be dragging down your credit score can often help raise your credit scores.
There are also steps you can take to build your business credit score that may make it easier to get financing other than an MCA. This may include applying for an employer identification number, setting up trade lines with your suppliers or applying for a business credit card.
» MORE: Business loans for bad credit
Offer collateral
A borrower who offers collateral — an asset such as equipment, a vehicle or real estate — may find it easier to get approved by a lender. Lenders look to minimize the chances that a loan won’t be repaid. They assess risk based on a borrower’s credit, time in business, business revenue and other factors. The lender’s risk can be lowered by offering an asset that can be seized if you default on the loan.
Add a cosigner
If you’re having difficulty getting approved for traditional financing, adding a cosigner may help you avoid MCA financing. When someone agrees to be a cosigner on a business loan, they agree to make payments on the loan if you don’t. Having two guarantors on a loan can reduce the risk to the lender and improve your chances of getting approved.
A cosigner with excellent credit, strong income and assets would typically work to your benefit when applying for a loan. Also, remember that if you default on the loan, the cosigner’s finances will be affected along with your own.
Compare a variety of lenders
You should compare a number of lenders, including different types of lenders, before settling on MCA financing. Banks generally offer the best loan terms, but can also be difficult to qualify for. However, that doesn’t mean they all have the same requirements. For example, U.S. Bank’s Quick Loan is available to businesses that have been in operation for a minimum of six months. Other banks require two years in business.
If you can’t find bank financing, the requirements for SBA loans typically offer a little more flexibility. Online lenders would be your next option if you can’t qualify for a bank or SBA loan because of your credit score or lack of time in businesses.
Last updated on July 3, 2024
Wondering if you qualify?
It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.
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Frequently Asked Questions
A merchant cash advance company is a financial company that advances a borrowing business a lump sum of cash in exchange for a percentage of the business’s future sales.
Merchant cash advances are one of the most expensive forms of business financing. Factor rates typically range from 1.1 to 1.5, but can translate into APRs that range from 40% to 350%. Your total cost, however, will depend on the amount advanced, the factor rate and other fees charged by the MCA company.
Simply having a merchant cash advance on your credit report won’t negatively impact your credit; however, they are an expensive form of financing that can trap you in a harmful cycle of debt, eat away your cash reserves and even result in a judgment. These consequences can all impact your credit.