Understand merchant cash advances in Canada—holdbacks, factor rates, costs, pros/cons, and lower-cost alternatives for SMEs.
A merchant cash advance (MCA) is typically a purchase of future receivables. You receive a lump sum today; in return, the funder collects a percentage of your daily/weekly deposits (the holdback) until a fixed total payback is reached. Because it’s not an amortizing loan, there’s no fixed end date—the speed of repayment rises and falls with your sales. See our Merchant Cash Advance overview for program details.
Say you accept $60,000 with a 1.28 factor. Your total payback is $76,800. If your holdback is 10% and you deposit $5,000 one day, $500 is remitted; you keep $4,500. Busy weeks shorten the timeline; slow weeks extend it. There’s no interest/principal schedule—just a fixed payback you must reach.
Use our calculator to compare an MCA holdback against a fixed payment from a loan or lease.
If your need is equipment-specific, financing the asset directly is often cheaper and more predictable: Equipment Loans, Equipment Leases, or Refinancing & Sale-Leaseback. Mehmi also sells equipment directly—browse current Inventory.
If you already have an MCA and want to reduce costs, explore Business Refinancing.
If your revenues are invoices on terms, factoring may fit better than an MCA because the customer’s credit helps drive approval: Invoice & Freight Factoring.
A GTA service firm faced an HVAC failure two weeks before a large corporate contract. Bank timing didn’t work. Mehmi arranged a small MCA for the urgent repair so crews could launch on time. Thirty days later—once receivables started to land—we replaced the MCA with a Working Capital Loan and a modest Line of Credit for vendor purchases. With predictable payments and a flexible draw facility, the client stabilized cash flow and completed the contract profitably.
Is an MCA a loan?
Usually no. It’s a purchase of future receivables with a fixed total payback collected from a share of your deposits. See Merchant Cash Advance.
How fast can funding happen?
Often very fast with light documentation. If you have a few extra days, a Working Capital Loan or Line of Credit may reduce total cost.
What makes MCAs expensive?
Pricing is set by a factor rate (e.g., 1.28×) to a fixed payback, not an APR. If you repay quickly, the implied APR can be high.
Can startups qualify?
Often yes—especially if deposits are consistent. If you invoice customers, consider Invoice & Freight Factoring.
What if my need is equipment-specific?
Finance the asset directly: Equipment Loans, Equipment Leases, or a sale-leaseback.
Can I stack multiple MCAs to get more cash?
You can, but it’s risky. Stacking erodes cash flow and limits future approvals. Consider Business Refinancing instead.
Ready to compare your options? Start with the calculator, then share your bank statements and the exact invoice/repair quote and contact us. Feel free to contact our credit analysts.
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