Merchant Cash Advance

What a merchant cash advance is (in plain English)

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.

How repayment actually works

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.

Pros and cons you should weigh

When an MCA can make sense

• Critical, time-sensitive expenses: oven/compressor failures, truck repairs, or short payroll gaps.
  
  
• Card/deposit-heavy businesses: where revenues rebound quickly post-repair or promotion.
  
  
• Short runway to a high-margin event: where missing the window costs more than the financing.
  
  

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.

What to consider instead (often lower cost)

If you already have an MCA and want to reduce costs, explore Business Refinancing.

Underwriting: what Canadian funders actually look for

• Bank statement health: deposit consistency, average balances, NSFs.
  
  
• Sales mix & volatility: card vs. EFT, seasonality, concentration.
  
  
• Existing obligations: avoid “stacking” multiple MCAs; it drains cash and scares future lenders.
  
  
• Time in business & narratives: explain dips, growth plans, or contract wins with simple documentation.
  
  

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.

Case study: bridge now, optimize later (Ontario service operator)

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.

Practical steps to choose the right path

1. Define the real need and deadline. If funds are required in 24–72 hours, an MCA may be the necessary bridge. If you can wait, compare lower-cost options.
   
   
2. Run scenarios. Use the calculator to model fixed payments (loan/lease) vs. an MCA holdback.
   
   
3. Check assets and AR. If you own equipment or carry receivables/inventory, Asset-Based Lending or sale-leaseback can free cash at a lower cost.
   
   
4. Avoid stacking. If you already have an MCA, ask about Business Refinancing to consolidate.
   
   
5. Document once, use many times. Keep bank statements, IDs, and equipment quotes handy to speed decisions.
   
   
6. Get advice. Explore Business Loans in one call; we’ll benchmark MCA vs. loans, leases, and LOCs for your specific industry.
   
   

FAQs: Merchant Cash Advance in Canada

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.