Understanding MCAs

A Merchant Cash Advance (MCA) is a financial product that provides businesses with a lump sum of cash in exchange for a percentage of their future sales. Unlike traditional loans, MCAs are not based on the borrower's creditworthiness, but on the performance of their business. Typically, the lender will advance a sum of money to the business, which is then repaid through a percentage of the business's daily sales until the advance is fully repaid, along with the lender's fees and charges. The repayment period can vary, but it usually ranges from a few months to a year. MCAs can be an attractive option for businesses that require quick access to capital but do not qualify for traditional financing due to poor credit or limited collateral.