How It Works

MCA Explained

Revenue-Based Funding That Moves at the Speed of Your Business

  • Revenue-Based
  • Same-Day Funding
  • Transparent Terms

A merchant cash advance is a purchase of your future receivables. You receive a lump sum upfront. In exchange, a small fixed percentage of your daily or weekly sales is remitted back until the purchased amount is fully collected.

MCAs are not loans. There's no fixed monthly payment and no interest rate. The cost of capital is expressed as a factor rate — a simple multiplier applied to your advance amount.

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  • Business owner reviewing MCA terms
  • Funding advisor explaining holdback rates
  • Restaurant owner receiving capital
  • Contractor reviewing funding agreement
  • Retail business funded by Beacon Bridge
MCA vs Bank Loan

Two different funding structures side by side

Merchant
Cash Advance decorative element

  • Decision in hours, not weeks
  • Revenue-based qualification
  • Daily/weekly remittance from sales
  • Factor rate (1.10–1.50)
  • No collateral required
  • 3–18 month repayment window

Traditional
Bank Loan decorative element

  • 30–90 day approval timeline
  • Credit score driven (680+ typical)
  • Fixed monthly payments
  • Annual percentage rate (APR)
  • Collateral often required
  • 1–10 year terms

Key
Differences

  • MCA: purchase of receivables, not debt
  • MCA: no fixed end date
  • MCA: remittance adjusts with revenue
  • Bank: lower cost but harder to qualify
  • Bank: fixed payments regardless of sales
  • MCA: higher cost, faster access
Cost Breakdown

Understanding the real cost of an MCA

Factor Rate Range

1.10–1.50

Holdback Range

10–20%

Repayment Window

3–18 mo

Funding Speed

24–48 hr

Business owner reviewing MCA cost breakdown

Example: $50,000 Advance at 1.30 Factor Rate

Advance Amount $50,000
Factor Rate 1.30
Total Repayment $65,000
Cost of Capital $15,000
Daily Holdback (15%) ~$325/day*
Est. Repayment Period ~8 months*

*Based on estimated average daily revenue of $2,167. Actual daily remittance and repayment timeline vary based on your business revenue. This is an illustration only and does not represent a specific offer. Effective annualized cost for this example would be approximately 56% when expressed as an APR equivalent.

FAQ

Common questions about merchant cash advances

A merchant cash advance is a purchase of future receivables. A funder provides a lump sum to your business in exchange for a percentage of future daily or weekly revenue until the purchased amount is fully collected. It is not a loan. There are no monthly payments and no interest rate in the traditional sense.

Bank loans have fixed monthly payments, require strong credit scores and take weeks to close. An MCA is based on revenue, uses daily or weekly remittances that flex with your sales and can fund within 24–48 hours. MCAs use factor rates instead of APR. The trade-off: MCAs cost more than traditional bank financing but are faster and easier to qualify for.

A factor rate is a multiplier applied to your advance amount to determine total repayment. For example, a $50,000 advance at a 1.30 factor rate means you repay $65,000 total. Factor rates typically range from 1.10 to 1.50 depending on business revenue, time in operation and risk profile. Unlike interest rates, factor rates do not compound over time.

The holdback is the fixed percentage of your daily or weekly revenue that is remitted toward your advance. Typical holdback percentages range from 10% to 20%. Because it is percentage-based, your remittance naturally adjusts with your sales volume. Slower weeks mean smaller remittances. Busier weeks mean larger ones.

If your bank account has insufficient funds for a scheduled ACH debit, you may incur bank return fees. Repeated failures could constitute a breach of your MCA agreement, potentially leading to default remedies including legal action or enforcement of the UCC lien filed against business assets. Beacon Bridge Capital will work with merchants experiencing temporary revenue disruptions before pursuing collection remedies.

Most applicants receive a decision within hours of submitting a complete application. Funding is typically deposited within 24–48 hours of signing your agreement. Some deals close same-day depending on when documents are received and verified.

MCAs don't technically carry an APR because they are not loans. However, when the cost of capital is expressed as an annualized percentage for comparison purposes, effective rates typically range from 40% to 150%+ depending on the factor rate and repayment speed. Beacon Bridge Capital provides an estimated annualized cost disclosure with every offer so you can make an informed comparison.

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