If you run a business, you’ve probably come across different financing options for your organization. You can apply for dozens of loans that are available. You can also try other funding options, like cash advances and lines of credit. If you are interested in getting a merchant cash advance, here are some differences between this financing option and other loans. 

Credit Card Usage

If your organization does most of its business with credit cards, a merchant cash advance is an excellent option for you. Businesses that receive many credit card payments in small amounts are the best candidates for this financing type. Money gets paid in a lump sum with small business loans, and you have to secure the loan. Usually, this requires collateral like cars or real estate. A cash advance does not require any of this, and you only need to have a high number of credit card transactions during your operating hours.


Cash advances do not typically have a lot of requirements you have to meet. Lenders only look at your credit card receivables and use them to determine your ability to qualify. Small business loans look at your company as a whole. You will have to supply paperwork and documentation, like tax returns and bank statements. If your business is not in great financial shape, you likely won’t qualify for a small business loan. Cash advances do not require a lot of documentation. As long as your credit card sales are steady and consistent, you may still qualify.


A merchant cash advance does not have set repayment terms. The repayment terms differ based on how much money you bring in through credit card sales. It is valuable because if the business is slow, your repayment for that month will be smaller. You won’t have to pay more than you have to pay off a bill. With a small business loan, look at the prerequisites. Some lenders have specific loan terms. You will have to pay a certain amount back each month, even if your business has slowed down. Keep this in mind when deciding what loan option to use. 

These are some ways that merchant cash advances differ from small business loans. When considering a loan, research and see which one suits your business needs best. A cash advance or a small business loan can take your business to new heights and help with your success.