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Merchant Cash

Advance

Merchant Cash

Advance

Merchant Cash

Advance

Merchant Cash

Advance

Merchant Cash

Advance

A quick funding process that offers same day business loans to business owners.

Get up to $1M funded the same day

Flexible terms from 6 months to 3 years

Competitive rates on all loan programs

Minimal documentation required

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The Best Short Term Business Loans in 2024

Additional Short Term Business Funding Programs Available

Learn More About Short Term Business Loans

What to Consider Before Getting a Same Day Business Loan

Exploring the Short Term Business Loan Application Process

How to Compare Short Term Business Loan Lender Options

Frequently Asked Questions

Compare Merchant Cash Advance Options

A merchant cash advance (MCA) is a financing option designed to help small and medium-sized business owners access capital quickly. According to a 2024 Federal Reserve survey, 8% of small businesses sought MCAs, with an approval rate of 82%. While the high approval rate and fast funding make MCAs attractive, they aren’t the right fit for every business.
Gova Funding has been supporting business growth for over two decades by providing competitive rates and terms on merchant cash advances. With years of experience, we are confident in offering some of the most effective programs in the industry. Below, we provide an overview of this financial product along with alternatives that may better suit your needs. You can contact us at any time with questions or apply online to receive same-day funding.

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How I can Apply ?

Applying has never been easier. You can either call our toll free number 24 hours 7 days a week at:

(888) 513-2247

Submit your online application by clicking apply below and entering a few basic details about your business.

Applying has never been easier. You can either call our toll free number 24 hours 7 days a week at:

(888) 513-2247

Submit your online application by clicking apply below and entering a few basic details about your business.

Applying has never been easier. You can either call our toll free number 24 hours 7 days a week at:

(888) 513-2247

Submit your online application by clicking apply below and entering a few basic details about your business.

Applying has never been easier. You can either call our toll free number 24 hours 7 days a week at:

(888) 513-2247

Submit your online application by clicking apply below and entering a few basic details about your business.

Apply Now

What Do I Need to Qualify?

Below is a list of the general requirements to get approved for business funding with our basic program.

Business Bank Account

4 Months of Bank Statements

Average 10K Monthly Revenue

Positive Bank Balance

Best Merchant Cash Advance Alternatives

Small Business Administration (SBA) Loans

SBA loans are low-cost, government-backed financing options offered through approved lenders, including qualifying major banks. They support a range of business needs, such as real estate purchases, operations in underserved communities, or businesses owned by service members. While applicants generally need a credit score of 600 or higher and the approval process can be lengthy, SBA loans remain an important option that every business owner should consider when exploring funding opportunities.

Lines of Credit:

A business line of credit functions much like a credit card, providing flexible access to funds up to a predetermined limit. Interest is only applied to the portion of funds actually used. This financing option typically requires a strong credit history and thorough documentation, and the approval process can take several weeks.

Equipment Loans:

Equipment loans are specifically designed for purchasing business assets, using the equipment itself as collateral. This often allows lenders to offer lower interest rates, making them a cost-effective way to acquire essential tools, machinery, or technology needed for business operations.

Invoice Factoring or Financing:

This involves converting accounts receivable into immediate cash. Invoice factoring means selling the invoices to a lender who then handles collections (possibly alienating customers), while financing allows the business to retain control over collections. It helps manage cash flow but requires evaluating customer creditworthiness.

Business Term Loan:

A traditional term loan from a bank is the most common type of business funding and should be your first stop next to the SBa if you are considering financing. You can receive a loan for 2 to 7 years with monthly payments. The current rates are approximately 15% or more at most national banks as they rely on the prime rate plus formula which is currently at 8.5% for 2024. This type of funding is ideal for almost any type of business expense including longer term financing projects as there are almost no cheaper borrowing options outside of friends and family. It is important to note that the approval process is several months, you generally need a relationship with the bank, you need at least 2 years in business, and there are extensive documentation and excellent credit requirements.

Personal Loans:

Personal loans are taken out by business owners, using their personal credit and potentially risking personal assets. They provide capital for rates between 15%-40% with term sup to 5 years but can endanger your personal finances/assets if there is a default.

Business Credit Cards:

Business credit cards offer a revolving line of credit with options for cash advances at high-interest rates that approach 40% in today’s high interest rate environment. They are suitable for managing periodic cash flow issues or for accruing rewards on business purchases but have higher interest rates and lower credit limits compared to other loans.

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  Short Term Business Loans

Apply for Reliable

  Short Term Business Loans

Apply for Reliable

  Short Term Business Loans

Apply for Reliable

  Short Term Business Loans

With Shield Funding, multiple direct lenders compete to give you the best offer. You save money, avoid

extra hassle, and could have cash in your account the same day.

With Shield Funding, multiple direct lenders compete to give you the best offer. You save money, avoid extra hassle, and could have cash in your account the same day.

With Shield Funding, multiple direct lenders compete to give you the best offer. You save money, avoid extra hassle,

and could have cash in your account the same day.

With Shield Funding, multiple direct lenders compete to give you the best offer. You save money, avoid extra hassle, and could have cash in your account the same day.

Apply Now

What is a Merchant Cash Advance?

A merchant cash advance (MCA), also called a business cash advance, allows a business owner to receive upfront capital by selling a percentage of future sales to a lender at a small discount. Repayment is tied directly to your revenue, so the lender is paid back as your business generates sales.

Historically, MCAs were primarily offered to businesses that processed credit cards, with payments automatically deducted through the credit card processor. Today, MCAs are also available for companies that don’t process credit cards. In these cases, repayment is structured as a daily or weekly percentage of your bank deposits. The exact percentage is agreed upon between the lender and borrower when the contract is established, typically a small fraction of your revenue, which determines the payment amount.

It’s important to note that a merchant cash advance is not a traditional business loan. Instead, you are selling future sales through a contractual agreement with the lender. For tax purposes and regulatory considerations, it is treated differently from a loan, though certain fees may be deductible. It’s recommended to consult with a CPA, accountant, or financial advisor to fully understand the implications

How Does a Merchant Cash Advance Work?

A merchant cash advance is structured as a purchase of future sales, so your business needs to have an existing revenue stream before applying. The lender reviews your recent months’ sales to estimate what your upcoming sales will look like and then advances a lump sum based on those projections. The process typically follows these steps:

A business owner applies for an MCA:

The business owner submits an application for a merchant cash advance, typically online, with a brief form. The lender will then request additional information and documentation to verify the business’s sales, cash flow, and ownership. Generally, this includes providing the last four months of business bank statements, along with basic ownership verification and identification.

The lender provides a lump sum of cash:

Rather than fixed monthly installments like a conventional loan, the business repays the MCA by giving the lender a small percentage of its daily or weekly sales. The repayment percentage and schedule are agreed upon upfront between the business and the lender.

The business repays the advance:

Just like managing inventory, predicting weekly payroll can be tricky. Having a business line of credit provides peace of mind, ensuring you can cover employee wages without stress. During weeks with higher payroll demands, you can access additional funds and repay them later when your cash flow improves, keeping operations smooth and employees satisfied.

Repayment is automatic:

Repayments are automated, with the lender deducting the agreed-upon percentage directly from the business’s bank account via ACH until the advance and any associated fees are fully paid. Because the payment is tied to daily sales, the amount may vary day to day, though lenders typically provide accurate estimates for daily or weekly repayment.

Repayment is complete:

Operating a business involves numerous unpredictable expenses, particularly for early-stage owners. Access to a financial cushion, such as a line of credit or similar funding, allows them to cover unexpected costs without interrupting daily operations. This safety net provides the stability and flexibility needed to manage the business efficiently, giving owners confidence and control while supporting long-term growth and success.

What Will a Merchant Cash Advance Cost You?

The cost of a merchant cash advance (MCA) is determined by the factor rate and the repayment period rather than traditional interest. Instead of accruing interest, a fixed fee is applied to the advance amount, and that fee is added to the principal to calculate the total repayment.
For example, if a business receives $100,000 through an MCA with a factor rate of 1.30 over 12 months, the added fee would be $30,000, making the total repayment $130,000. Payments might be structured at $500 per day, Monday through Friday, for the 12-month term. This example is straightforward because of the one-year repayment period.
If the same $100,000 advance must be repaid in only six months, the daily payments increase, which effectively raises the cost of the advance. To compare shorter-term MCAs to other financial products, an annualized percentage rate (APR) is often used. While this is not a true APR—since it doesn’t account for compounding interest and daily payments—it provides an easy way to understand and compare the relative cost of different financing options.

How to Calculate the Annual Interest?

Calculate the Total Repayment Amount

To calculate the total repayment amount you multiply the borrowed principal amount of the MCA by the factor rate: $100,000 (MCA amount) x 1.3 (factor rate) = $130,000

Calculate the Total Cost Percentage of the MCA

To calculate the total cost percentage you divide the fee above the principal ($30,000) by the contracted loan amount: $30,000/$100,000 = .30 or 30%

Calculate the Annual Rate

To calculate the annual rate we take the cost percentage (factor rate as a decimal) and divide it by days in a year: 0.30 x 365 = 109.5

Calculate the Interest Rate

(Annualized Interest Rate) = To calculate the interest rate we divide the annual rate by actual days in the contract: 109.5/180 = 0.6083 or 60.83%
Calculating the annual interest rate for a loan with a fixed payment amount is a helpful tool for general comparisons, but calculating the true APR for a product like an MCA, where the balance decreases with each daily payment, requires a more complex calculation. For more information on rates and drilling down on APR for comparing financial products see the true costs of a merchant cash advance.

How to Calculate the Payment?

MCA providers generally request their repayment via a “holdback percentage”. This is the percent of sales revenue that will be “held back” and sent to the lender via ach. MCA providers commonly charge holdbacks of 10% to 15% depending on your gross monthly sales. In the case of a $100,000 advance at a 1.3 factor rate ($130,000 total payback), your company would likely be generating 100k a month in sales. An 11 percent hold back would result in an approximate payment of $500 a day or $2500 a week, depending on which repayment option works with your cash flow.
Because monthly revenues are never exact, there is the possibility that there could be minor adjustments up or down on payments along the way. The hold back is based on projections and after years of learning with prior business activity the payment amount is generally established to be in a close proximity to the average revenue of the borrowing business over the time frame of the advance.

How Much Does a Business Qualify For?

Merchant cash advance approval amounts depend on your monthly sales revenue and overall business bank deposits and cash flow. Approval amounts for this funding option can range as high as 100% or more of your monthly processing amounts. As an example, if your business currently has monthly gross receipts of $50,000, you can possibly get approved for 50k or more. This is a general guideline but can vary depending on the type of business you have and your credit profile.

Have a Merchant Cash Advance Already?

Many of our clients come to us after having a merchant cash advance out with another company. Some reasons why they have come are: the rates or payments for their merchant cash advance were too high; the funding amount wasn’t enough; they required additional funding; there were just too many add-on fees and they didn’t want to overpay for their next advance; or they were just not happy with the level of service. Shield Funding can pay off your existing advance and get you a better program that is less expensive, provides more funding, is not inundated with additional fees, and meets your expectations on every level. We also offer options for merchant cash advance consolidation for individuals that have multiple advances and want only one payment.

A Bad Credit Funding Solution

Many clients come to us looking for an alternative to traditional business loans because they have poor credit or they just don’t meet the basic credit requirements from a bank. Our merchant cash advance is a great business funding solution for business owners that are looking for a bad credit business loan. Getting funded is based off of business revenues and not just credit history alone which makes it great for individuals with lower credit scores. If you have been denied a business loan because of bad credit or you fail to meet traditional financing credit requirements our merchant cash advance program can be a great alternative.

Common Factors That Impact Your Merchant Cash Advance Application

Your credit history is not the dominant contributing factor in the approval process, however, a better payment history contributes to higher approvals at better terms as with any credit and lending. What is more important than credit history is the actual financial health of the business. With most applications, we look at 4 months of the most recent business bank statements and here is a list of items that we analyze:
- Monthly Gross Revenue: how much in revenue/sales is generated monthly. The more, the better.
- Business Cash Flow: how much money flows in and out of your account each month.
- Amount of Deposits: how many deposits go into the business bank account.
- Negative Days: how many days each month have a negative balance. Try not to have negative balances.
- Time in Business: how many months or years, the more time the better the profile.
This is a general idea of what most lenders will look at in the merchant cash advance industry, although each and every lender may have their own requirments.

The Pros and Cons of Merchant Cash Advances

There are pluses and minuses to any lending product. Although merchant cash advances are good for many business owners, they are not right for everybody. Smart borrowers should review both carefully before making a borrowing decision.

Pros of an MCA

They’re quick and easy. When a small business owner needs cash in a hurry, a MCA is a great option. Instead of waiting weeks or months to receive approval on a bank loan, you can get an MCA in a few days. Lenders examine your business’s daily credit card receipts, evaluating them for cyclical patterns and trends, when deciding how much money to advance. Because they require less documentation to approve lending than a bank loan, they fund faster.

Physical collateral isn’t required.

A bank loan or other form of financing might require you to pledge business assets to secure the loan – which means you risk losing them if you can’t afford to repay. MCAs are unsecured – which means the lender doesn’t require physical collateral. Instead, the MCA provider will likely require a personal guarantee. A personal guarantee is a written agreement where your signature indicates agreement to be held personally responsible for repaying the advance. With this agreement, the MCA provider can recoup any losses in the event that you can’t pay.

Physical collateral isn’t required.

Sales and payments align

With a traditional loan, you owe a monthly lump sum payment regardless of your cash flows. Since a MCA is repaid from credit card sales, repayments match how well your business is doing. During a slow week or month, you’re not stuck scrambling to cover a large loan payment.

Borrowers with poor credit can get funding.

It can often be difficult for a small business owner with poor credit to access funding. But since lenders extend a merchant cash advance on the basis of credit card sales, a personal or business credit score is less important. MCAs are one of the most accessible forms of credit if you have a low credit score.

Cons of an MCA

Your APR could be very high.

If you could easily calculate the APR on an MCA, you’d find that it typically ranges from about 40% to 120%.  Merchant cash advances are far more expensive than traditional bank loans and several other borrowing products whose APRs are typically 10%-15%, although rising in 2023 because of the current banking crisis stemming from Silicon Valley. Other borrowing options are also rising like business credit cards, with APRs from 15% to 40% recently, or online small-business loans, with APRs from 20% to 99%.
Higher sales lead to a higher APR., you repay the MCA faster — and, subsequently, APR goes up.

There’s no benefit to repaying early

With a factor rate, you pay a fixed amount of fees on top of the advance, so there’s no way to save on interest with a MCA. When you’re repaying a traditional “amortizing” small-business loan, early repayment results in less interest paid.

You can fall into a debt-cycle.

The speed of funding and easy approval of MCAs can trap you in a debt cycle if you’re not careful – especially if you don’t qualify for other types of financing. The extremely high cost and frequency of repayments for the first MCA could cause cash flow problems, leading to a borrower needing to take out another advance shortly after they borrowed the first MCA. A daily payment of hundreds or thousands of dollars, for example, could put a strain on your cash flow and put you at risk of default.

There’s not a lot of federal oversight.

Because MCAs are not structured as loans, but as commercial transactions, the industry isn’t subject to federal regulation. They aren’t considered banking transactions so they’re regulated by each state’s Uniform Commercial Code in each state. This has led to some unscrupulous lenders and many people to question are MCAs predatory. It is for this very reason that we take every step to secure the satisfaction of all our clients and our reviews and 20 year reputation speaks for itself.

Contracts can be confusing

Even if you take the time to read the contract, they’re often loaded with unfamiliar terms (which we define below). Also, most MCA lenders do not provide APRs, so it’s hard to compare them with other financing products. We do however show you a way to calculate your apr on an MCA.

Possible Guarantees

Some lenders may also require signing a legal document called a confession of judgment as part of the advance paperwork. If the company takes you to court, signing that confession of judgement may forfeit your right to defend yourself, although most states are now disallowing this.

MCAs can be too expensive for their intended use.

While an MCA can be a great way to help your business through a slump, they’re not meant to fund large, long-term projects. If you’re planning an expansion or new investment, you have the time to shop around and get approved for a business loan.

Best Uses for Merchant Cash Advances

A merchant cash advance can be a good choice for your business, despite their cost, if you use the funds wisely. The best uses for an MCA usually spring from temporary, unexpected cash needs that fit well with the short MCA funding time frame. Below is a short list of the more common uses but for a more extensive list check out the best uses for mca’s.

Help with temporary cash flow problems.

Purchasing inventory that you can quickly resell at deep discount.

Placing a large inventory order to fulfill contracts.

Unplanned expenses.

Paying other debts to avoid default.

Cover working capital needs.

Profitable opportunity arises.

Is It Right For You?

This is a very common question because many business owners are taking on debt to grow their business. There are a variety of things to consider as each individual case is different, but two things in particular are very important and should be considered.
First, is budgeting for your payments. Do you have the available cash flow for current and future payments. Second, is the reason you are taking on debt justifiable. It is important that you account for ROI or your return on investment. It does not make sense to take on debt that is more expensive than the profit opportunity.
Short term ROI is easy to calculate with the following formula: your return on the investment (%) = net profit/total investment cost, and then multiply by 100. So as an example, if you have an advance of $50,000 for a year with a 20 percent fee your total cost is $60,000. If this investment in your business makes $10,000 more a month (12 x $10,000=$120,000), after a year your net profit would be ($120,000 – $60,000=$60,000). Now figure out your ROI as $60,000 (net profit) / $60,000 (investment cost) which equals 1 and then multiply that by 100 (1 x 100). This would make your ROI in this scenario a 100% return on your investment.
If you want to read more on whether this type of business funding is a good fit explore this helpful article about whether or not a merchant cash advance is right for you.

Contract Terms in an MCA to Know

Here are definitions for some of the confusing terms you might find in a MCA:
A. Factor rate – the rate you’re paying to borrow the money.
B. Specified percentage, holdback, or retrieval rate – this is the percent held back daily from sale to repay the advance.
C. Purchase price or advance amount – the amount you receive, or your advance from the lender.
D. Receipts purchased amount – total payback amount, or the future credit card receipts you’ve sold to the lender.

How to Manage Your Merchant Cash Advance

If you decide that a MCA is right for your business, you must manage it as you would any type of debt.
Include your best estimate of daily or weekly repayments in your cash flow projections and budgets. Make sure you save and keep enough cash on hand to cover payments, particularly if you chose the ACH withdrawal repayment method. Don’t budget credit card sales to go elsewhere when the lender will be holding them back.
If you’re repaying the advance from a bank account, make sure you always have the funds available to cover the ACH withdrawal. Bouncing a payment is similar to bouncing a check or credit card payment.
It’s also a good idea to wait to take out another MCA until you’ve paid off the first one. You can receive better rates from a lender once you’ve proven your ability to repay an advance and built up a relationship with them. This also prevents you from falling into a debt cycle.

What Happens if you Default on an MCA

What happens if you do not pay back a MCA? Most providers include a personal guarantee in their contract so that they can come after your personal and business assets. They could place liens against your personal residence or vehicles, buildings used for business purposes, or other assets. It is always advised to contact the lender if you are having problems before going into default.
MCA’s don’t report your on-time payments to credit bureaus, but they do report defaults. If you have a default on your credit history, it will make it harder to get financing in the future.
Only you can decide if a merchant cash advance makes sense for your business. Examine the pros and cons list against your situation, look at how the factor rate will impact your cash flows, and talk to a lender if you need more information.

MCA vs. Traditional Bank Business Loans

We are the first ones to say that a bank should always be your first stop when trying to secure money for your business. A merchant cash advance is for clients that have reasons to not go the traditional financing route, such as bad credit, cannot wait for the bank approval process, or just an immediate opportunity or similar.
There are a variety of ways someone can fund a business endeavor. The important point is that funding your business should be well thought out. For some people, a financial planner or accountant can be a good option to consult with before making a decision. And just as you are considering a merchant cash advance, you should also explore the best alternatives to an MCA loan. Shield funding wants you to be aware of all of your possible business funding options so here are some alternatives:

Frequently Asked Questions

Can a business loan improve my credit score?

Yes. If the lender reports payments to commercial credit bureaus and you repay the loan on time, a bad credit business loan can help build or improve your business credit profile over time. Just ask your business loan expert at the lender of your choosing.

Can a business loan improve my credit score?