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Pejman (PJ) Salehsari April.26.2022 9 min read

Best Merchant Cash Advance Alternatives to Fund Your Business | CircleUp

What is a Merchant Cash Advance?

A Merchant Cash Advance, also referred to as an MCA, is a form of financing that provides a business owner fast access to capital. An MCA is not a loan, but rather an agreement from an alternative financial institution to buy a portion of your future sales.

In turn, you pay a portion of all debit and credit card sales, plus a fee to their MCA provider. 

MCAs can be a solution for fast cash, but they can come with interest fees that are much higher than alternative financing options. Here we’ll cover four alternatives to Merchant Cash Advances to consider when looking for business financing options.

Merchant Case Advance Alternatives


Revolving Line of Credit

A revolving line of credit shares some features with a merchant cash advance, in that it provides fast access to large sums of cash to support, grow, and maintain a business. Lines of credit are business loans that can be as low as a couple of thousand dollars or as high as tens of millions, whereas Merchant Credit Advances typically offer up to a maximum of $250,000. 

A line of credit is a non-dilutive financing option, meaning business owners maintain complete ownership, control, and profits accrued in their business. This type of financing is ideal for growing companies looking to scale, whether that’s into new retail locations, digital marketing campaigns, or research for new product lines. 

Lines of credit are best used for large-ticket needs such as maintaining cash flow. Many of our credit customers use lines of credit to cushion cash flow between equity rounds, fulfill large Purchase Orders (POs), and enter new markets or large retailers. Depending on the financial institution supplying your line of credit, repayments can often be made on a scaling basis dependent on your revenue or sales for that month, making it a desirable option for growing businesses. 

Best for: Lines of credit are best for established businesses looking to scale. Because the line of credit can grow with your business, it presents great flexibility to access increased funding opportunities as you grow.


Business Term Loans

A term loan is a fixed sum of money lended to your business, usually to cover similar expenses to a line of credit. There are two main differences between a term loan and a line of credit. The first being that payments on the loan are made in a monthly fixed amount, similar to how you’d pay off a mortgage or car loan. So, if sales are slow that month, you’re still on the hook for paying your entire loan bill. 

The second difference is that once the loan is paid off, there is no opportunity to take out additional funds, or increase your loan amount before it’s completely paid off. Instead, upon completion, the borrower can apply to take out an additional loan. For some businesses, this may not be a problem, for those looking to scale quickly, a fixed loan amount may slow down your desired growth or place limits on which opportunities you can take on. 

The approval process for term loans can be longer than those on a merchant cash advance. MCAs generally take less than one day to complete an application and up to 48 hours to receive funding. Term loans can be slower, with the approval process generally taking two to seven business days. 

Best for: Business term loans are best suited for well established businesses with steady sales, and limited desire for growth. Due to the fixed nature of term loan repayments, you’ll want to be completely sure you’ll be able to pay the monthly fee in full.



Pejman (PJ) Salehsari

PJ is a Senior Associate at CircleUp Credit Advisors. He’s responsible for vetting and structuring new credit opportunities as well as monitoring a portfolio of current relationships. PJ has five years of underwriting experience and holds a degree in Finance from Cal Poly.