Running a small business comes with its fair share of ups and downs. One week, sales are flying. The next, you’re juggling late invoices, surprise repairs, and the cost of stocking up for the busy season. When cash gets tight, you might start looking at funding options to keep things moving. One option worth knowing about is the merchant cash advance (MCA).

Let’s break down what it is, how it works, and whether it might be a good fit for your business.

What is a Merchant Cash Advance?

A merchant cash advance is short-term funding designed for businesses that take a lot of debit and credit card payments. Instead of making fixed monthly repayments like with a small business loan, you pay back an MCA through a percentage of your future card sales.

Think of it like a cash boost up front that you gradually pay back as your customers tap their cards. No property or inventory is needed as security — it’s all tied to your sales.

How Does It Work?

Here’s the short version:

• You apply for an MCA and share your recent sales history.

  
  

• The provider offers you a lump sum based on your turnover.

  
  

• Instead of paying back set installments, a cut of your card sales (say, around 10%) automatically goes towards repayment until it’s cleared.

  
  

Repayment usually runs between 3 and 18 months, but the pace depends on how much you sell. Busy season? You’ll repay quicker. Quiet spell? Repayments slow down too.

When Could It Help?

MCAs can be handy when you need quick, flexible cash to cover:

• Buying extra stock ahead of a busy period
  
  

• Covering repairs or emergency costs
  
  

• Renovating your shop, café, or restaurant
  
  

• Funding marketing campaigns
  
  

• Boosting working capital when cash flow is tight
  
  

  
  

Because repayments flex with your card sales, it can feel less stressful during quieter months.

The Pros and Cons

Like any finance option, MCAs aren’t perfect. Here’s a quick reality check:

Advantages:

• Fast access to funds (sometimes within 24 hours)
  
  

• No need for traditional collateral
  
  

• Repayments adjust to sales volume
  
  

• Straightforward application process
  
  

Disadvantages:

• Costs can be higher than other finance options
  
  

• Contracts and factor rates aren’t always crystal clear
  
  

• Repayments only work on card sales (cash doesn’t count)
  
  

• You pay a fixed fee, so there’s no saving by repaying early

  
  
  

Is an MCA Right for You?

MCAs tend to work best for small businesses with steady card sales — think retail shops, restaurants, bars, or trades taking lots of card payments on jobs. If you’ve got a big seasonal spike coming, or just need a short-term boost, an MCA could make sense.

But if you want longer-term, lower-cost borrowing, a small business loan might be a better match.

The Bottom Line

Merchant cash advances aren’t a one-size-fits-all fix, but they can be a smart short-term solution if you rely on card sales and need quick funding. The key is comparing your options, weighing up the costs, and choosing what actually works for your business.

👉 Curious to see how an MCA stacks up against a traditional loan? LendPair makes it easy to compare funding offers side by side, so you can pick the one that keeps your business moving forward.