The merchant cash advance (MCA) alternatives should provide low rates and fees. Other terms, such as the loan amount and repayment term, should also be sufficient for your business goals and the intended use of the funds.
There are a number of reasons why we recommend using an alternative—which we detail below—but in a gist, MCAs can be an expensive form of credit. These typically have short repayment terms and charge large fees relative to the financing amount. This results in a loan that can have an annual percentage rate (APR) of more than 100%. With an alternative, there’s a good chance that you can save money.
Here is our list of the seven best merchant cash advance alternatives.
Best Brokers for Alternatives to Merchant Cash Advances:
- Clarify Capital: Best overall for multiple loan options with bad credit
- Smarter Finance USA: Best for equipment financing
- Lendio: Best for multiple options for low-revenue businesses
Best Providers for Alternatives to Merchant Cash Advances:
- Fundbox: Best line of credit for short-term expenses
- National Funding: Best for customer service and customized financing options
- Bluevine: Best line of credit for high-revenue businesses
- FundThrough: Best for invoice factoring
An MCA is an expensive form of financing that you should consider as a last resort if you cannot get funding elsewhere. If you’re concerned you may not qualify for a loan, we recommend reading our guide on how to get a small business loan. It contains tips on what to expect throughout the loan process, what lenders look for, and how you can improve your chances of getting approved.
Best Merchant Cash Advance Alternatives at a Glance
Clarify Capital: Best Overall for Multiple Loan Options With Bad Credit
Rates & Terms | |
Starting Interest Rate | 10% |
Estimated APR | 14.99% |
Loan Amount |
|
Repayment Term | 36 months |
Repayment Method | Daily, weekly, bi-weekly, and monthly |
Funding Speed | As fast as same day |
Financing Type | Term loans, lines of credit, invoice factoring, Small Business Administration (SBA) loans, and equipment financing |
Qualifications | |
Credit Score | 500 |
Time in Business | 3 months |
Revenue | $10,000 monthly |
If you’ve had issues getting approved for a business loan, you should consider Clarify Capital. It has a low credit score requirement of 500, works with startups, and is also a broker with over 75 lenders in its network, which means you’ll have multiple chances to get approved.
Clarify Capital offers many different types of loans. Some examples include term loans, lines of credit, invoice factoring, Small Business Administration (SBA) loans, and equipment financing. While qualification requirements can vary depending on the type of loan you apply for, you should be able to find some financing options with at least three months’ time in business and $10,000 in monthly revenue.
A major benefit of working with a broker like Clarify Capital is the ability to work with a dedicated loan advisor. This advisor will not only walk you through the process but can also offer recommendations for the type of loan best suited for your business goals and needs.
Applying with Clarify Capital can be done on the provider’s website or by calling the company’s toll-free number. Applications can be completed in under two minutes with no fee or obligation to get a loan. Once approved, funds can be disbursed within 24 hours.
Smarter Finance USA: Best for Equipment Financing
Rates & Terms | |
Estimated APR | 7% to 20% |
Loan Amount | $10,000 to $1 million |
Repayment Term | 24 to 60 months |
Repayment Method | Weekly, monthly, seasonal, and deferred |
Minimum Down Payment | $399 (documentation fee) to 35% |
Funding Speed | 2 to 4 days from time of application |
Financing Type | Equipment loans and leases |
Qualifications | |
Credit Score | None, but 600 is recommended |
Time in Business | None |
Revenue | None |
Smarter Finance USA specializes in equipment financing—so it’s a good fit for business owners seeking loans or leases for any business-related equipment needs. It tops our list of the best equipment financing companies.
One of the advantages of working with this provider is that, as a broker, it has nearly 40 lenders in its network, giving you multiple chances to get approved, along with the potential to pick from several loan options. It can finance different types of equipment for multiple industries, such as healthcare practices, vendors, restaurants, and food service providers.
Financing is available for up to $1 million with rates that start as low as around 7%. Depending on your business qualifications, it’s possible to qualify with just a $399 down payment. This provider has no minimum requirements for credit score, time in business, or revenue. As a result, it’s a good provider to consider if you are having trouble getting equipment financing from other lenders because you are a startup, have low revenue earnings, or have bad credit.
Smarter Finance evaluates applications on a case-by-case basis to try to find you a loan you’re qualified for. With that being said, having certain strengths in your application can make it easier to get a loan with competitive rates and terms.
To apply, you can submit an application on the Smarter Finance website. The process should take no more than ten minutes, and you can also contact the provider using its toll-free number if you have any questions or prefer to apply by phone instead.
Lendio: Best for Multiple Loan Options for Low-revenue Businesses
Rates & Terms | |
Estimated APR | 0% to 36%, varies based on loan type |
Loan Amount | $500 to $5 million |
Repayment Term | 1 to 30 years, depending on loan type |
Repayment Schedule | Varies based on loan type |
Funding Speed | 24 hours to 1 month; varies based on loan type |
Financing Type | Invoice factoring, line of credit, SBA loan, term loan, equipment financing, commercial real estate (CRE), business acquisition, startups loans, and credit cards |
Qualifications | |
Credit Score | 560, but varies based on loan type |
Time in Business | 3 months |
Revenue | $50,000 annually |
Lendio is another broker in our guide with over 75 lenders in its network. However, it’s able to work with companies that have lower revenue earnings. To qualify, your business just needs to have $50,000 in annual income.
Other qualification requirements will vary depending on the type of loan you get. As a general rule of thumb, however, you’ll need at least three months’ time in business and a credit score of 560.
Working with Lendio gives you many of the same benefits as other brokers. Instead of having to apply separately to multiple lenders on your own, you can have a loan specialist from the Lendio team do the research for you to match you with the right loans. This can also serve as a way to confirm that the loan you think you need is best suited for your business.
To begin the application process with Lendio, you can visit the provider’s website. Depending on the details of your application, you’ll be given additional instructions to provide supporting documentation. It’s important to note that your application is not considered complete until after you provide these items.
Fundbox: Best Line of Credit for Short-term Expenses
Rates & Terms | |
Starting Interest Rate | 4.66% |
Estimated APR | 10% to 79% |
Loan Amount | Up to $150,000 |
Repayment Term | 12 or 24 weeks |
Repayment Schedule | Weekly |
Funding Speed | 24 hours |
Financing Type | Line of credit |
Qualifications | |
Credit Score | 600 |
Time in Business | 6 months |
Revenue | $100,000 annually |
With the exception of invoice factoring, Fundbox has the shortest repayment term out of all the providers on our list. However, it has consistently received excellent customer reviews and offers competitive rates and loan terms, making it a good option for a short-term loan. For these reasons, it also made our list of the best working capital loans.
It offers a small business line of credit that can be used for a variety of business expenses. This can include payroll, inventory, business materials, and more. Since it’s a revolving line of credit that allows you to draw funds on an as-needed basis, it can also be used to cover emergencies, temporary shortages in cash flow, and unexpected expenses.
With this provider, you’ll also have the opportunity to apply for its Flex Pay product. This gives you up to three additional business days to pay business expenses at no additional charge. This works by allowing vendors to bill your Flex Pay account, which helps ensure timely payments—at which point, you are given three business days as a grace period to repay your Flex Pay account balance.
Applying with Fundbox is a quick and easy process that does not impact your credit score. You can apply online and get a decision within several minutes. If approved, funds can also be made available to you as fast as the next business day.
National Funding: Best for Customer Service and Customized Financing Options
Rates & Terms | |
Starting Interest Rate | Factor rate 1.11x times the loan amount |
Estimated APR | Varies |
Loan Amount |
|
Repayment Term |
|
Repayment Schedule |
|
Funding Speed |
|
Financing Type | Term loan, working capital, equipment financing, and leasing |
Qualifications | |
Credit Score | 600 |
Time in Business | 6 months (2 years for equipment financing) |
Revenue | $250,000 annually |
National Funding is a provider that places a heavy emphasis on customer service. It keeps most of its loans in-house rather than brokering them out to other lenders, giving you a better opportunity to work closely with the team.
You can get different types of loans, including term loans, working capital loans, and equipment financing and leasing options. Factor rates start as low as 1.11x times the loan amount for well-qualified businesses, and most of its loans are short-term loans with repayment terms of less than 18 months. Equipment financing, however, can have a repayment term of up to 60 months.
Businesses that typically get approved with National Funding are companies performing well financially and are primarily seeking additional funds to continue expanding. To be eligible for financing, you’ll need at least $250,000 in annual revenue and six months’ time in business. You’ll also need a credit score of 600 and at least four months of business bank statements.
Depending on the type of loan you get with this provider, you may be able to save money by paying off the loan early. Working capital loans, for instance, can receive up to a 7% discount on the remaining balance if paid within the first 100 days. Similarly, equipment financing customers can get up to a 6% discount.
To learn more or to apply, you can visit the National Funding website.
Bluevine: Best Line of Credit for High-revenue Businesses
Rates & Terms | |
Estimated APR | 6.2% to 78% |
Loan Amount | $6,000 to $250,000 |
Repayment Term | Up to 12 months |
Repayment Schedule | Weekly and monthly |
Funding Speed | 24 hours |
Financing Type | Line of credit |
Qualifications | |
Credit Score | 625 |
Time in Business | 24 months |
Revenue | $480,000 annually |
Bluevine is another provider on our list that offers a small business line of credit—and it is one of our top-recommended small business lines of credit. However, unlike Fundbox, you’ll be able to get a longer repayment term of 12 months instead of 24 weeks.
One of the downsides is that qualifying can be more difficult. Bluevine requires a minimum credit score of 625, time in business of 24 months, and annual revenue of $40,000 monthly. Your business must also be structured as a corporation or limited liability company (LLC), be in good standing with your secretary of state, and have no bankruptcies in the past three years. States that are not eligible for financing include Nevada, North Dakota, and South Dakota.
Loan repayments can be made weekly or monthly. However, to qualify for the monthly payment plan, your business must meet additional requirements. You must have a credit score of 700-plus, have three years’ time in business, and earn $80,000 in monthly revenue.
You can start the application process on the Bluevine website. Applications can be completed in several minutes with no impact to your credit score. If eligible, you could receive a decision in as little as 5 minutes.
FundThrough: Best for Invoice Factoring
Rates & Terms | |
Estimate of Fees |
|
Estimated APR | 33% to 70% |
Loan Amount | $500 to $10 million |
Repayment Term | Up to 90 days |
Advance Rate | 100% |
Funding Speed | 2 to 5 days from time of application |
Factoring Contract Required? | No |
Financing Type | Invoice Factoring |
Qualifications | |
Credit Score | None |
Time in Business | None |
Revenue | None |
If you’re looking for invoice factoring, FundThrough is an excellent option. It even made it to our list of the leading invoice factoring companies. Advance rates of up to 100% are available without any long-term factoring contracts, and you can get up to $10 million in financing.
For the best experience with FundThrough, you’ll need to integrate your account with QuickBooks or OpenInvoice. This gives you the option to select the invoices you’d like to receive funding for and is what allows the provider to issue funds as quickly as 24 hours.
Invoice factoring with FundThrough requires no minimum credit score, time in business, or revenue requirement. However, you will need to have outstanding invoices of at least $100,000 to one of your customers to be eligible.
You can visit the FundThrough website to submit an application. To ensure a more streamlined process, you should gather your business tax returns, articles of incorporation, business licenses, a government-issued photo ID, and a voided check containing your business bank account information.
How We Chose the Best Alternatives to Merchant Cash Advances
The providers we selected as the best merchant cash advance alternatives were chosen using the following criteria:
- Cost of financing (interest rates and estimated APR)
- Financing type
- Loan amount
- Repayment term
- Qualification requirements for credit score, revenue, and time in business
- Application, approval, and funding speed
- Customer reviews and ratings
Why You Should Consider Alternatives to a Merchant Cash Advance
MCAs are typically only considered as a last resort because of their cost—which is also why alternatives are usually the better option for financing. They can also indirectly lead to other issues, such as negatively impacting your credit and your business finances. You can read our guide on merchant cash advances to learn more about it and help you understand if it’s the best option for your business.
1. You can find cheaper financing options.
It’s not uncommon for an MCA to have an APR that exceeds 100%. This is because of the fees you must pay, as well as its short repayment terms. MCAs typically charge a factor rate based on the amount of financing you need. For example, a factor rate of 1.25x on a loan of $10,000 means you would ultimately pay back 25% more, or $12,500.
You can use our merchant cash advance calculator to see just how much an MCA will cost you.
2. You can preserve your credit rating.
By resorting to an expensive form of financing like an MCA, your business cash flow can be negatively impacted. This, in turn, can indirectly affect your company’s ability to make timely payments on your other debt obligations.
3. You can get a loan with longer repayment terms.
Other types of small business loans can offer repayment terms of five years or more. This includes equipment financing, working capital loans, and other term loans. With a longer repayment term, you can also get lower monthly payments that can help keep your business cash flow at higher levels.
Bottom Line
As stated, merchant cash advances are an expensive form of financing with short repayment terms. Before getting one, you should consider some alternative types of financing, as these can offer larger loan amounts, lower interest rates, lower monthly payments, and more.
If you need help with selecting the best financing for your needs, consider using a broker like Clarify Capital. It is our top recommendation because it requires only a low credit score, works with startups, and is a broker with over 75 lenders in its network. Find out more about it by visiting its website today.