A merchant cash advance is a purchase of a portion of your future business revenue at a discount. You receive a lump sum of capital today and in exchange repay that amount — plus a fee — through automatic daily or weekly deductions from your business bank account. It is not a loan; it's a commercial transaction structured as a sale of future receivables.
A factor rate is the pricing mechanism for an MCA — a decimal multiplier applied to your advance amount to determine total payback. A factor rate of 1.30 on a $100,000 advance means you repay $130,000 total. The $30,000 difference is the cost of capital. Factor rates typically range from 1.10 to 1.50 depending on your business profile and funder.
No. Legally, an MCA is a purchase of future receivables, not a loan. This means MCAs are not subject to usury laws or traditional lending regulations — which is why they can be issued faster and with more flexible underwriting. No APR is disclosed on the contract, though you can and should calculate effective APR using our calculator before agreeing to any offer.
The holdback rate (also called the retrieval rate) is the percentage of your daily deposits withheld each business day as repayment. A 12% holdback means 12 cents of every dollar in deposits goes toward repaying the advance. Repayment ends when the full payback amount has been collected.
Most funders require: (1) at least 6 months in business, (2) $10,000–$15,000/month in gross revenue, (3) an active business bank account, and (4) no open bankruptcies. Some funders require 12 months for larger advances. Time-in-business and monthly revenue thresholds vary by funder and advance size.
MCA funders primarily underwrite on business cash flow, not personal credit. Many fund businesses with scores as low as 500. A score in the 550–620 range with $50,000+/month in consistent deposits will often qualify for a meaningful advance. Higher credit scores may result in better factor rates, but a low score alone is rarely disqualifying.
Most funders run a soft pull for initial evaluation — no impact to your score. A hard pull, if performed, typically only happens after you've agreed to move forward with a specific offer. Ask about this before authorizing any credit pull.
No collateral is required for a merchant cash advance. The "collateral" is your future revenue — the funder has a right to a portion of your incoming sales, not to any physical asset. You will not be pledging real estate, equipment, or personal assets.
To receive an offer, you'll typically need: (1) a completed application with basic business information, (2) 3–6 months of business bank statements, and (3) a government-issued ID. No tax returns, P&L statements, or financial projections are required for initial approval.
After approval and contract signing, funds are typically wired to your business bank account within 24–48 hours. Same-day funding is available in some situations — particularly for emergency needs or returning customers with strong histories.
Most funders advance between 50–150% of your average monthly revenue. A business doing $60,000/month might qualify for $30,000–$90,000. Cresto Funding works with advances from $5,000 to $2,000,000. Larger advances require more documentation and stronger cash flow history.
APR is not disclosed on MCA contracts, but you can calculate it: effective APR = (cost ÷ advance) ÷ (term in months ÷ 12) × 100. A 1.25 factor rate on a 9-month advance is roughly 66% APR. A 1.30 factor on a 6-month advance is closer to 100% APR. Use our calculator to see your exact number before committing.
Some funders charge origination fees, admin fees, or processing fees in addition to the factor rate. Always ask for a full fee disclosure and read the contract carefully before signing. Cresto Funding works with transparent partners — the factor rate should tell the whole cost story.
Unlike a traditional loan, paying off an MCA early typically does not reduce the total payback amount — you agreed to repay a fixed dollar amount, not a rate over time. Some funders offer early payoff discounts; this varies and should be negotiated upfront. Always ask before signing.
With split withholding, payments automatically slow with your revenue — you always remit the same percentage. With fixed ACH debit, a significant revenue drop could create pressure. Contact your funder proactively in this situation. Most would rather work with you on a modified schedule than push a business into default.
The fees paid on an MCA (the cost above the advance amount) are generally treated as a deductible business expense, similar to interest on a business loan. Confirm the proper treatment with your accountant, as it can depend on how the transaction is structured.
Still have questions? Submit your application and a Cresto Funding specialist will walk through your specific situation — no obligation, no hard credit pull.