Merchant Cash Advance (MCA)
A short-term capital product structured as the purchase of future receivables or sales, repaid via fixed daily or weekly debits. High-cost, high-speed, and frequently misapplied.
Structure
An MCA is technically a purchase of future receivables, not a loan. The funder advances a lump sum and collects a fixed total amount (the purchase price plus a factor rate) via daily or weekly ACH debits.
Because the structure is a purchase, MCAs are not subject to most state usury caps. Effective annualized cost can range from roughly 40 percent to well over 200 percent depending on term and factor rate.
Honest use cases
MCAs are appropriate in a narrow set of cases: defined-purpose bridges with a measurable return on the use of funds, or rapid liquidity for time-sensitive opportunities where the math clearly works.
They are rarely the right tool for ongoing working capital, and they are almost never the right answer for an operator who already carries one. Most MCA problems are problems of structure, not problems of access.
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