Back to Blog Feed

We will help you grow your small business.

Learn More

Join our Newsletter for great tips and updates.

Small business owners tell me they are often pestered with merchant cash advance offers. The fast cash is tempting, but should you do it? I always counsel business owners to never borrow money unless you need it. That said, there are times when small businesses do need working capital in a hurry. And merchant cash advance loans might be the right solution.But responding hastily to a marketing email or phone call is not smart. Instead, let’s examine the merchant cash advance in detail. I’ll explain everything you need to know – but were afraid to ask. Then you can make an informed decision.


You may be familiar with accounts receivable factoring. In this case, you sell unpaid customer invoices to a third party, at a discount. You get cash now, and they collect the debt from your customers. Merchant cash advances are similar, with two differences:

  • You are selling future electronic transactions, not existing invoices
  • You repay a fixed percentage from future credit or debit card transactions until your debt is repaid

The MCA lender makes money because you agree to repay more than you’re borrowing. For example, you might borrow $10,000 but you will agree to repay something more than that. There are two types of MCA programs, for small businesses with:

  • Lots of lower-dollar transactions, or
  • Fewer, high-dollar transactions

Your actual cost depends on two numbers:

  • The factor rate – the percentage that determines your total repayment amount. The factor rate is typically between 1.15 and 1.4. Using our $10,000 example and a factor of 1.15, you would repay a total of $11,500.
  • The retrieval rate – the percentage deducted from each day’s credit card transactions as repayment. This usually runs between 5% and 15%.

You can negotiate these numbers, and you should.

Here at UCS, we specialize in merchant cash advance for small businesses that have been in business at least six months. We offer:

  • Fast, no-fee application process
  • Approvals within 24 hours
  • Quick funding within a few days
  • No personal guarantee or collateral requirements

Your business credit score doesn’t matter. In fact, we can probably help, even if you have bad credit.


The need for working capital is as varied as small businesses themselves, right? Your salon needs to replenish inventory.  Your dental or medical practice needs to make up for slow collections. You need to fix a disaster. Or grab a new opportunity.

According to, “Banks have been stingy with lending to small businesses since the beginning of the financial crisis that began in 2007. While the economy has improved since then, credit availability has not eased up at all. Given a tight credit market, small businesses have to take advantage of whatever resources they can find. Merchant cash advances are a novel workaround to unavailable bank lending.”

Many small businesses don’t qualify for bank loans anyway. You haven’t been around long enough. Or you don’t have collateral. Or a great business credit score. Besides, it takes time to obtain a bank loan. That doesn’t help if you need working capital now.


Merchant cash advance is a form of small business financing. But, technically, it is not a loan. That’s good for you in some ways, not so good in others. You have to weigh the tradeoffs against your need and current business situation. It can get tricky, which is why I recommend talking with one of my team members here at UCS. They are small business funding experts.

The Good

  • High approval rate (no credit or collateral requirements)
  • Simple process with minimal paperwork
  • Fast funding
  • No restrictions on how you use the money
  • Flexible payments that are always affordable
  • Payments are automatically deducted, so you can’t forget – no late charges or damage or business credit “dings”
  • Flexible timeframe to repay – usually up to a year

The Not-So-Good

An MCA is not a loan because you’re selling future transaction revenue. And you usually have to repay within a year. So MCAs aren’t subject to usury laws. That means lenders can (and do) charge much higher interest than banks or other types of small business loans. Often there are additional fees for set-up, processing or even making payments. These effectively raise the interest even higher. Leonard Wright is a Money Doctor columnist. He says equivalent annual percentage rate (APR) for an MCA can be 60% to 200%.


Never be afraid to ask – that’s why we’re here. Talk is free. We’ll take the time to learn about your business. And why you need working capital now. Then we’ll review your merchant processing statements to get a feel for the size of your transactions. With that, we can tailor a merchant cash advance loan that fits you comfortably. No worries about unethical practices.

Bonus Benefit

UCS also offers merchant processing services, with access to wholesale rates. That can make a big difference. It did for our client Andrew. One of my team members, George, helped Andrew get the working capital he needed, pronto. He also got Andrew’s restaurant set up with a new credit card processor that cut Andrew’s processing fees by 40%. And thanks to faster batching of receivables, Andrew now gets paid faster, too.

Our #1 goal here at United Capital Source is exceptional customer service. One on one. All about you. Maybe a merchant cash advance isn’t a great choice for your business, at least right now. I guarantee we’ll tell you the truth about that. And if MCA isn’t the right choice, we’ll match you with the best alternative.

That’s because we’re interested in your long-term business growth. And developing a long-term relationship with you. Not making a quick buck by pushing you into an MCA or any other small business loans that are not in your best interest. That’s why our clients – like Andrew you met earlier – consider us such a valuable business partner.

We will help you grow
your small business.

Get Started

Leave a Reply