What is a Merchant Cash Advance?

What is a Merchant Cash Advance?

A Quick Answer:

A merchant cash advance (MCA), sometimes called revenue-based financing, is a unique form of funding for small businesses and eCommerce businesses with a unique qualification and repayment process primarily determined by revenue generated rather than traditional loan qualifying metrics.

What is the difference between a Merchant Cash Advance and a Traditional Bank Loan?

Before getting into the differences, note that MCAs and traditional loans are both still loans where you’ll receive funds from a bank and you will have to repay that amount with an added fee over time.

The main differences between a traditional loan and merchant cash advances come from both the qualification process and the way repayment is done.


For traditional bank loans, getting funding will require a business owner to meet different kinds of criteria in order to qualify.

Qualifying metrics include things like personal credit score, business credit score, years in business, yearly revenue (with consistent revenue for the past 3 years), business plan, loan proposal, and potentially more.

Beyond these many targets a business owner must hit, traditional bank loans are more suited for traditional businesses.

Newer types of businesses, namely eCommerce businesses, are much harder for traditional banks to assess.

Because of this, it often happens that traditional banks will not even entertain a loan for an eCommerce business, even if that business meets all of the qualifying criteria.

By contrast, merchant cash advances will look at different business metrics just as a traditional bank loan, but will often use the revenue generated by the business as its main qualifying metric.

Through the use of technology, the lender for a merchant cash advance can typically hook into the backend of whatever platform an eCommerce merchant sells on and assess the health of their business to assist in assessing risk.

In turn, this makes for a much simpler qualification process that is also typically much faster than a traditional bank loan.


Traditional loans have very familiar repayment terms that most people are familiar with.

When you are loaned money for a traditional loan, you have a repayment schedule (for businesses, this is typically 1-3 years), and your fee is based on interest, typically measured using APR.

With that in mind, you will receive funds, and starting 30 days after receiving them, will have to pay back your loan in 12 installments broken out into 12 even minimum payments.

When you finally pay off your loan, you will have paid back the principal amount and whatever interest rate applied to your loan.

Merchant cash advances, once again, are focused on the revenue a business generates, and use that revenue to set the repayment schedule and minimum payments.

When you receive a merchant cash advance, repayment schedules are typically much shorter than traditional loans, ranging typically between 1 month and 6 months.

For repayment, merchant cash advances differ from traditional loans in that minimum payments can rise and fall based on the revenue generated by a business.

That means if you have a slow sales month, your minimum payment will be reduced, and when sales pick back up, your minimum payment will increase accordingly.

This method of repayment is beneficial to businesses and lenders, as sales for eCommerce businesses can easily rise and fall based on factors like seasonality and temporary stock-outs, and adjusting the minimum payment based on this ensures a more guaranteed payback.

Where to Obtain a Merchant Cash Advance

There are several ways to get a merchant cash advance all over the internet.

Since you’re reading this right now, the fastest way to get a merchant cash advance would be to use this site, Onramp Funds, to get an offer and qualify for a merchant cash advance.

When you sign up, you can choose from whatever platform you sell on, connect your account to Onramp, and receive a funding offer within 24 hours.


With this simple guide, you now know what a merchant cash advance is, how it differs from a traditional loan, and where to obtain one.

MCAs are more tuned to how eCommerce businesses work, and when utilized can help a business grow much faster than without a funding source, and help prevent business downfalls like stockouts.

So if you’re interested in a merchant cash advance, get an offer from Onramp and start growing!