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  • Jonathan Ortega

5 Myths about Merchant Cash Advances (MCA)

Updated: 2 days ago

Merchant cash advances have been gaining popularity among small businesses as an alternative form of financing. However, despite their growing use, there are still many misconceptions about what merchant cash advances are and how they work. In this blog post, we will be discussing some common myths about merchant cash advances and providing the facts to help you make an informed decision about whether this financing option is right for your business. From understanding that it's not a loan but rather a form of financing to the misconceptions of the high interest rate and strict requirements, we will provide you with the knowledge you need to weigh your options and make the best choice for your business. So, whether you're a business owner considering a merchant cash advance or simply curious about this financing option, read on to learn more.



  1. Myth: A merchant cash advance is a loan - A merchant cash advance is not a loan, it's a form of financing where a business gets a lump sum of cash in exchange for a percentage of its future credit card sales.

  2. Myth: Merchant cash advances have very high interest rates - The interest rate on a merchant cash advance is usually higher than traditional loans, but it's not as high as the rates charged by predatory lenders.

  3. Myth: Merchant cash advances have strict requirements - Many merchant cash advance providers have more relaxed qualifications compared to traditional lenders. This can include no credit score or revenue minimums, no collateral and no requirement of a long-term business history.

  4. Myth: Merchant cash advances are only for businesses with poor credit - Merchant cash advances are available to businesses with all credit scores, although those with poor credit may have to pay a higher rate.

  5. Myth: Merchant cash advances are only for short-term needs - Merchant cash advances can be used for short-term or long-term needs, and can be used for a variety of purposes such as working capital, inventory purchases, or equipment upgrades.

Before applying for a small business loan (SBA), business owners should be knowledgeable with some of the most common misconceptions when it comes to applying for alternative financing. If you have any questions about business financing, click the button below or reach out today to learn more about your options for customized loans.


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