Unlock Instant Capital: Your Guide to Merchant Cash Advances (MCAs)

What is a Merchant Cash Advance (MCA)?

A Merchant Cash Advance (MCA) is a popular, non-traditional financing option that allows your business to receive a lump sum of cash upfront.

Unlike a traditional business loan, an MCA is a sale of a portion of your business’s future sales/receivables in exchange for that lump sum. Repayment is based on a percentage of your daily or weekly sales, making it a flexible funding solution tied directly to your business’s revenue performance.

At Dragon Capital Funding, we make the process simple and fast. Our team of experts will guide you through every step, ensuring you get the equipment you need to grow your business.

How the Repayment Works

Instead of a fixed monthly interest payment, MCAs use two key terms:

Factor Rate

This is a fixed multiplier (e.g., 1.2 or 1.3) used to calculate the total repayment amount.

Example: If you receive a $50,000 advance with a 1.3 Factor Rate, your total repayment is $65,000 ($50,000 × 1.3). This cost is fixed and does not change if you take longer to repay.

Holdback

This is the agreed-upon percentage of your daily credit card sales or revenue that is automatically remitted to the MCA provider until the total repayment amount is satisfied.

Key Benefit: If your sales are slow, the dollar amount you repay is lower that day. If sales are booming, you repay faster.

Key Benefits of an MCA

MCAs are best suited for businesses that need capital quickly and have consistent daily sales (especially credit card sales).

Advantage	Description
Speed of Funding	Funds can often be approved and deposited in your account within 24-48 hours, making it ideal for immediate needs.
Easy Qualification	Approval is based primarily on your business revenue/sales volume, not just your personal credit score. This is a great option for businesses with less-than-perfect credit.
No Hard Collateral	MCAs are generally unsecured. You are not required to pledge physical assets like real estate or equipment.
Flexible Repayment	Payments fluctuate with your sales. When business slows down, your daily payment automatically drops, easing pressure on cash flow.
Simple Application	The application requires minimal documentation, often just a few months of bank and credit card processing statements.

Important Considerations & Transparency

Due to the nature of MCAs, it is essential that every business understands the following:

High Effective Cost:

While an MCA does not have an "interest rate," the fixed cost (factor rate) can equate to a very high Annual Percentage Rate (APR) compared to traditional loans. The cost is fixed and will not decrease if you pay off the advance early.

Daily Repayments:

The daily or weekly "holdback" payment can place a strain on your daily cash flow, especially if the percentage is high.

Not a Long-Term Solution:

An MCA is best used for short-term opportunities or emergencies (e.g., purchasing inventory for a seasonal rush, emergency equipment repair), not for long-term growth financing.

Important Disclaimer :
A Merchant Cash Advance is a purchase of future receivables, not a traditional loan. The cost is calculated using a Factor Rate, not a traditional interest rate. We encourage all prospective clients to carefully review the terms and ensure the projected revenue gain from the advance outweighs the fixed cost.

[NOTE: Depending on your state (e.g., CA, NY, VA, UT), specific commercial financing disclosures may be legally required to include an Estimated Annual Percentage Rate (APR) and other detailed payment terms.]

Comparing Alternatives to MCAs

While the speed of an MCA is often its greatest advantage, it’s important to know there are other options. Depending on your business needs, credit profile, and repayment timeline, one of these alternatives might be a better fit:

Business Line of Credit (LOC)

Best For: Ongoing working capital, covering gaps, or unexpected costs.

Key Difference from MCA: You only pay interest on the money you actually use. Repayment is typically monthly, not daily, offering more stable cash flow.

Short-Term Business Loan

Best For: One-time needs like bulk inventory purchase or small equipment purchase.

Key Difference from MCA: Repayment is a fixed monthly or weekly payment with a set term (e.g., 6–18 months). The cost is represented by a traditional interest rate, which is often lower than the effective APR of an MCA.

Equipment Financing

Best For: Acquiring specific machinery, vehicles, or technology.

Key Difference from MCA: The equipment itself serves as collateral, making these loans easier to qualify for and usually carrying lower rates and longer terms than an MCA.

Ready to Get Started?

If your business needs fast, flexible capital and has strong credit card sales, an MCA could be the solution. We are here to guide you through the process, ensure you understand the terms, and secure the best offer for your needs.

1. Submit Your Info

Use our quick online application (requires 3 months of bank statements).

2. Review the Offer

We will provide you with a transparent quote detailing the Advance Amount, Factor Rate, Total Repayment, and estimated Holdback.

3.Get Funded

Once accepted, funds are typically transferred to your business account within 1-2 business days.

CALL US NOW