What is a merchant cash advance (MCA)?

A merchant cash advance provides a lump sum of capital in exchange for a percentage of your future credit and debit card sales (or daily bank deposits). Repayment is automatic — a fixed percentage is deducted daily or weekly until the advance plus fees are repaid. MCAs are technically a purchase of future receivables, not a loan, so they carry factor rates rather than interest rates. A factor rate of 1.30 on a $50,000 advance means you repay $65,000 total. The effective APR can be extremely high — often 50%–300% or more. MCAs are accessible for businesses with poor credit or short history but should be used with extreme caution due to cost.