Choosing between MCA and term loan depends on your situation:
Merchant Cash Advance:
Best When:
- ●Need funding today/tomorrow
- ●Have strong card sales
- ●Credit score under 650
- ●Revenue fluctuates seasonally
- ●Don't want fixed payments
Cost: Higher (30-80% effective APR) Speed: Same day to 48 hours Credit needed: Minimal Payment: % of daily sales (flexible)
Term Loan:
Best When:
- ●Can wait 1-4 weeks
- ●Have steady revenue
- ●Credit score 650+
- ●Want predictable payments
- ●Need larger amount
Cost: Lower (8-30% APR typically) Speed: 1-4 weeks Credit needed: 650+ typically Payment: Fixed monthly
Side-by-Side Comparison:
| Factor | MCA | Term Loan |
|---|---|---|
| Speed | Same day | 1-4 weeks |
| Credit | Any | 650+ |
| Cost | Higher | Lower |
| Payment | Flexible | Fixed |
| Amount | $10K-$500K | $25K-$1M+ |
| Best for | Urgency, bad credit | Planned needs, good credit |
Decision Framework:
Choose MCA if:
- ●You need money in 48 hours or less
- ●Your credit is below 650
- ●You prefer flexible payments
- ●You have strong card sales
Choose Term Loan if:
- ●You can wait 2+ weeks
- ●Your credit is 650+
- ●You want lowest cost
- ●You prefer predictable budgeting
Can't Decide? Consider: If you qualify for a term loan and can wait, it's almost always the better financial choice. MCA's value is speed and accessibility, not cost.