Merchant cash advances allow businesses to get a lump sum of capital in exchange for a fixed share of their daily credit and debit card sales. Typically, merchant cash advances are extremely expensive with APRs ranging from 29 % to 132 %, so we don’t recommend them unless you’ve exhausted all other ways to get a business loan. For alternatives, look at our article about raising money for a business.
If you do decide to get a merchant cash advance, you can use this merchant cash advance review to learn about some of the leading providers in the space. We also tell you some things to look out for when applying for a merchant cash advance.
For background on merchant cash advances, review our comprehensive guide.
Best Merchant Cash Advance Provider – RapidAdvance
If you strike out with other loans options and decide to get a merchant cash advance, we recommend RapidAdvance because of their good customer service. In addition, they have easier qualification requirements than competitor CAN Capital, offer advances up to $500,000, and will let you keep your credit card processor.
At least 500 credit score,
3 months in business,
$2,500 in monthly credit card sales,
and 1 year left on lease.
currently by invitation only
based on processing
volume and history.
At least 550 credit score,
4 months in business,
and $4,500 monthly sales.
Average factor rate
1.14 to 1.42
Average % deducted daily from credit card sales (i.e. retrieval rate)
9 - 13 %
5 to 25 %
50 % to 80 %
29 % to 132 %
Average time to repay
How much can you borrow?
$5K to $500K
You can qualify for
up to 85-250 %
of your monthly credit
card sales volume.
Lower amounts if shorter
time in business.
$2K to $50K
Most loan offers are
between $4K to $10K.
$5K to $150K
You can qualify for
no more than 9 %
of your gross annual sales.
Time to Get Approved
2 business days
1 business day
10 minutes with
24 hours by phone
Time to Get Funding
3-5 business days
1 business day
3 business days
Required credit card processor
Agreed upon at time of funding
Why We Recommend RapidAdvance: Good Customer Service & Good Product
RapidAdvance was the most helpful and professional of all the merchant cash advance providers we researched. We recommend them because they seem like they will be straightforward with customers about pricing and terms. To start with, they won’t push you into an expensive merchant cash advance. They have a suite of loan products and will help you narrow down the best options for your business. Because of their commitment to good customer service, 85 % of RapidAdvance’s customers are repeat customers.
Beyond customer service, RapidAdvance’s product is better than what competitors are offering. It’s easier to qualify for a merchant cash advance with RapidAdvance than CAN Capital. Also, you can borrow up to $500,000 through RapidAdvance, while CAN Capital limits you to $150,000. Finally, RapidAdvance stands out by letting you keep the credit card processor of your choice. Many merchant cash advance providers, including CAN Capital, require you to use a particular credit card processor to ensure that they get repaid. RapidAdvance will work with your current credit card processor.
RapidAdvance is expensive, like almost any merchant cash advance, with APRs of 80 % (possibly higher) and a factor rate around 1.20. However, they will provide discounted rates for applicants with better credit and a longer time in business.
Square Capital: Recommended for Square Merchants
The words “affordable” and “merchant cash advance” usually don’t belong in the same sentence, but Square Capital offers reasonable rates. In addition to having a huge cost advantage over CAN Capital and RapidAdvance, Square Capital is also faster to fund your loan. Of course, the catch is that Square Capital is only available to businesses that use Square to process credit card payments.
The APR for a Square Capital cash advance is around 35 %. This is 2-4 times cheaper than a traditional merchant cash advance! Square is able to charge lower rates because they have a lot of data about Square merchants and can better evaluate your history and pattern of credit card processing.
Square Capital is really fast. There’s no application process because all merchants invited to the program are pre-approved. You just have to select your loan amount and can receive funding the next business day. CAN Capital and RapidAdvance take 3 or more business days to fund your loan.
Unfortunately, Square Capital is only open to businesses that use Square to process credit card payments, and they only offer up to $50,000 in financing. You must go with another provider if you’re not a Square merchant or if you need more capital.
See Our Full Square Capital Review
While we have written about CAN Capital in the past, there unfortunately isn’t too much that makes them stand out from competitor RapidAdvance. Their eligibility criteria is stricter than RapidAdvance’s. They also don’t lend as much as RapidAdvance.
Borrowers should be aware of two other things with CAN Capital. They may require you to switch to a credit card processor of their choice, and they will place a lien on your business assets. This means your business assets can be seized if you default on the loan.
Although there isn’t much to recommend CAN Capital in our opinion, don’t rule them out. They are one of the largest providers of merchant cash advances in the country, and it could help to shop around and see which provider gives you the best rate.Visit Can Capital
See Our Full Can Capital Review
Eligibility for a Merchant Cash Advance
Before applying for a business cash advance, ensure that you meet the provider’s minimum eligibility criteria. It’s easier to qualify for a merchant cash advance than a traditional loan. Young businesses and business owners with poor credit can qualify. Merchant cash advance providers care most about the volume of credit and debit card sales you bring in each month.
Can Capital: You need at least 550 credit score, 4 months in business, and $4,500 in monthly revenue to qualify for an advance from CAN Capital. These requirements are stricter than what RapidAdvance calls for.
Merchant cash advances are usually very expensive. As we mentioned, Square is the most affordable of the three providers we’re reviewing.
There are two costs associated with a merchant cash advance:
- Factor rate – The factor rate is the markup charged by the merchant cash advance provider. You multiply it by the amount of the advance to get the total amount you owe to the provider. Factor rates range from approximately 1.13 to 1.48, depending on the lender. For example, if you are advanced $10,000 from Square, which charges a factor rate of 1.13, you must repay $11,300.
- Retrieval rate – This is the percentage of your daily credit and debit card sales that goes to the merchant cash provider. It can range from approximately 5 to 50 % depending on the lender.
To make it easy to compare costs across different loan products, we’ve provided the APR for each provider. APR is the cost of a loan over the course of one year. The time it takes to repay your loan also affects the cost of your merchant cash advance. A factor rate of 1.13 over 12 months is pretty affordable, but the same factor rate over 3 months is expensive.
How Much Can You Borrow?
Most merchant cash advance providers will lend you about 9-10 % of your annual credit card sales volume. You stand to receive the largest advance with RapidAdvance. You can shop around and see which provider is willing to lend you the most money. However, be careful not to shop around too much because too many credit checks can ding your credit score.
Time for Approval and Funding
A merchant cash advance is typically a very fast way to get capital. Square Capital is the fastest of the three providers.
Square: This is fastest way to get a merchant cash advance because there’s no application. If you receive an invitation, all you have to do is login into your Square account and choose how much capital you need. Square will review your request and transfer funds into your linked bank account as quickly as the next business day.
After applying online, a RapidAdvance staff member will contact you within 24 hours to gather further information and (if you qualify) provide a quote. Should you decide to go forward, funding is available in 3-5 business days.
You can apply for a CAN Capital advance online or by phone. After applying, you will learn right away (if online) or within 24 hours (if by phone) if you’re pre-approved. If you’re pre-approved, it takes about 3 business days to get funding.
Credit Card Processor
Sometimes, you have to change your credit card processor when you get a merchant cash advance. This can be time consuming and a bit of a hassle if you’ve gotten used to your current processor. Merchant cash providers make money by getting a portion of your daily credit/debit card sales, and they sometimes only work with select processors. To learn more about credit card processing, check out our guide and our reviews of credit card processors.
You must use Square to process credit card payments.
An advantage of RapidAdvance is that they will work with almost any credit card processor.
CAN Capital only works with select credit card processors. You and CAN Capital will agree upon a credit card processor at the time of funding. We reached out to CAN Capital to find out which processors they worked with, but they didn’t respond.
Banks typically require collateral and a personal guarantee as security for a loan in case you default on the loan. Merchant cash advances require neither collateral nor personal guarantee. However, some providers place a lien on your business assets. This means that your business assets can be seized if you default on the loan.
Square Capital doesn’t require a personal guarantee or a lien.
RapidAdvance doesn’t require a personal guarantee, and most advances don’t require a lien either.
CAN Capital doesn’t require a personal guarantee for its merchant cash advance, but it does place a lien on your business assets. This means that your business assets can be seized if you default on the loan.
Alternatives to a Merchant Cash Advance
We want to reiterate that, given the cost of a merchant cash advance (APR ranges from 29 % to 132 %), you should first consider other sources of capital. Most business owners resort to a merchant cash advance either because they have poor credit or because they need fast funding. Several other less expensive options exist for those with poor credit or on tight deadline.
OnDeck and Kabbage provide fast (1-2 business days), short-term loans for those with poor credit and are typically 2 to 3 times more affordable than merchant cash advances. We recommend OnDeck as the best short-term loan provider.
Specific types of businesses may be eligible for other types of financing. For example, invoicing businesses can get a same-day loan through Fundbox, and startups can get affordable loans from a non-profit called Accion.
If you have decent credit, you shouldn’t consider a merchant cash advance at all. Instead, try an SBA provider or a peer-to-peer lender such as Funding Circle or Lending Club. Their interest rates are 8-18 times lower than a merchant cash advance!
Lastly, don’t rule out using a business or personal credit card for a small, one-time purchase. The APR, averaging around 15 %, is much better than the cost of a merchant cash advance.
RapidAdvance is our recommended merchant cash advance provider because it’s easy to qualify, you can borrow large amounts of money, and you can keep your own credit card processor. Their customer service is the best we’ve found among merchant cash advance companies. However, if you’re a Square merchant and need to borrow small amounts of capital, Square Capital is the least expensive option for a merchant cash advance.