Compare merchant cash advance companies on total repayment in dollars, fees included, not on speed or the quoted factor rate. Then check what share of sales they collect, how often, how they collect, and what happens if sales drop.
- Factor rates typically run from about 1.1 to 1.5.
- Example: $60,000 at a 1.22 factor rate means $73,200 repaid, a $13,200 cost before fees.
- Collection usually takes about 5% to 20% of sales, daily or weekly.
- At 8% collection, a $55,000 month sends about $4,400 out of the business.
- Fuel Business Capital publishes a baseline of about $20,000 monthly revenue and six months in business.
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Your print shop just landed its biggest order ever: 12,000 shirts for a university, delivery in five weeks. The blank supplier wants $60,000 before anything ships, and your account holds about a third of that. The press is paid for and ready; the only thing between it and the order is a pallet of blanks you can't buy this week.
That's the situation a merchant cash advance is built for: cash today, priced against sales that haven't landed yet. And when you compare companies, one figure matters more than any rate anybody quotes: the total dollars going back.
Quick verdict
An advance can make sense when sales land most weeks, the deadline can't move, and the money buys something that earns again inside the repayment window. Get two or three offers for the same amount, compare total repayment in writing, and test the collection share against a slow month. If the purchase can wait a quarter, price a term loan, line of credit or SBA loan first; they're cheaper per dollar.
How a merchant cash advance works
It isn't a loan; it's a purchase. The company buys a share of your future sales and pays you less than that share is worth because you get the money now. Approval leans on your deposits rather than your credit history: a bank underwrites who you've been, an advance company underwrites what's landing in the account now.
Pricing is a single factor rate, set the day you sign and applied once. Nothing accrues behind it, which is simpler than bank credit, but it also means the number never improves. Collection works like a dimmer: a set share of sales, usually about 5% to 20%, leaves daily or weekly, so strong weeks send more and thin weeks less.
How they collect, and which rules apply
Some companies debit your own business account by ACH, so your money sits where it always has until the payment leaves. Others route your sales through an account they control and pass the remainder on, which can put a day between your money arriving and you being able to spend it. On identical pricing, those are two different daily lives, so ask which one you're signing.
Because it isn't a loan, the rate caps and standardized disclosures that cover bank credit largely don't apply, though a number of states have added their own disclosure requirements. In practice, the agreement in front of you is the rulebook.
What an advance really costs
Independent research puts factor rates between about 1.1 and 1.5. On the shirt order: a $60,000 advance at 1.22 means the company is buying $73,200 of future revenue, so the money costs $13,200. Stated as a yearly cost, that's far above what a bank would charge on the same amount; the difference is what the speed costs.
- The cost is fixed. Strong sales clear the balance sooner without reducing the total.
- The factor rate isn't the whole price. Some companies add origination or admin fees that can run into thousands. Add them in before comparing offers.
- Test the slow month. At 8% collection, a $55,000 month sends about $4,400 out in small daily pieces. Can you still put a deposit down on the next order after that?
Four questions to ask every company
- What's my total repayment in dollars, fees included? Not the rate: the number.
- What percentage of sales comes out, and how often? Daily and weekly feel very different at the same total.
- How do you collect, and what does the agreement restrict? Many contracts limit how you take or route payments while the balance is open.
- What happens if sales drop? Ask who picks up the phone and what an adjustment involves. How readily they answer is information in itself.
Then put two or three offers side by side for the same amount and let them compete on the total. If a pitch is mostly speed and pressure, slow down. Have an accountant or business attorney review the agreement before you sign.
Who a merchant cash advance fits
A fit: sales landing most weeks, a deadline that won't move, and something to buy that earns again inside the repayment window: the order you just signed, or equipment that opens a second shift.
Not a fit: if the purchase can wait a quarter and your books are in order. A term loan, a business line of credit or an SBA-backed loan is simply cheaper per dollar, so price that route first.
Fuel Business Capital
None of the four answers live on a website; someone has to quote you. Fuel Business Capital is an alternative small-business funder that writes advances alongside term loans and SBA loans.
- Floor: roughly $20,000 a month in steady revenue and at least six months in business; imperfect credit, existing advances or a bank decline matter less than cash flow.
- Starting: a 60-second form with basic contact details; no Social Security number, no credit check that affects your score and no documents up front.
- Next: a live specialist typically reaches out within 10 minutes; moving forward needs recent bank statements and a few operational details.
- Speed: approval to cash in as little as 24 hours, sometimes the same day. Treat that as the best case.
Put the four questions to the specialist and get every dollar of the repayment on paper before you sign.
Pros and cons
What works
- Fast access to cash based on deposits rather than credit history.
- One fixed cost with nothing compounding behind it.
- Collection flexes with sales, taking less in slow weeks.
What doesn't
- Far more expensive per year than bank financing.
- The fixed cost doesn't fall if you repay early.
- Fees can add thousands on top of the factor rate.
- Standard lending disclosures largely don't apply.
Frequently asked questions
How do I compare merchant cash advance companies?
Ask each for the total repayment in dollars including all fees, the percentage of sales collected and how often, how they collect, and what happens if sales drop. Compare offers for the same amount on the total.
What is a factor rate?
A multiplier applied once to the amount advanced. At 1.22, a $60,000 advance means $73,200 repaid. It isn't an interest rate or APR, and the real annual cost is usually much higher than the factor rate suggests.
Is a merchant cash advance a loan?
No. It's structured as a purchase of future sales, which is why it's priced with a factor rate and why many loan rules and standardized disclosures don't apply, though some states require their own disclosures.
How much of my sales will an MCA take?
Usually somewhere around 5% to 20% of sales, collected daily or weekly. Test that share against a slow month, not a strong one.
When is a merchant cash advance a bad idea?
When the purchase can wait and you could qualify for a term loan, line of credit or SBA loan, which cost much less per dollar.
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