When the bank says no — or just moves too slowly — most owners end up choosing between two paths: a merchant cash advance (MCA) or a business term loan from an alternative lender. They solve different problems. Here's how to pick.
The 30-second version
- Choose an MCA when speed matters most, your credit is mid-600s or below, and your revenue flows through card sales or steady deposits.
- Choose a term loan when you want predictable payments, a planned project, and your credit and time in business are strong enough to qualify.
What each one actually is
Merchant Cash Advance
An MCA is not technically a loan — it's a purchase of future receivables. You receive a lump sum now; the funder collects a fixed total amount over time, usually via daily or weekly remittances that track your sales activity. Cost is expressed as a factor rate (e.g., 1.25 means you repay $1.25 per $1 advanced).
Business Term Loan
A classic structure: borrow a fixed amount, repay on a fixed schedule with interest. Alternative-lender term loans close far faster than bank loans, but underwriting still leans on credit score, time in business, and financials.
Side-by-side comparison
- Speed: MCA reviews can start same-day; term loans typically take a few days to a few weeks. Timing varies by lender and documentation.
- Credit: MCAs regularly work with mid-600 and below; term loans usually want 650–680+.
- Payments: MCA remittances flex with sales under most structures; term loans are fixed and predictable.
- Cost: MCAs cost more for the speed and accessibility; term loans are generally cheaper for those who qualify.
- Best for: MCA — urgent gaps, inventory buys, bridging receivables. Term loan — expansion, equipment, refinancing, planned projects.
💡 Watch the total cost, not just the speed. Always compare the full payback amount and the payment schedule against your real monthly cash flow before accepting any offer.
Which one fits your situation?
Pick MCA-style funding if…
- You need capital this week, not this quarter
- Your credit is in the low-to-mid 600s (see our 650 credit score guide)
- Revenue is steady but seasonal or uneven
- The opportunity (inventory deal, urgent repair) outweighs the higher cost
Pick a term loan if…
- You're funding a planned project with a known budget
- You want one fixed payment you can plan around
- You have 1–2+ years in business and improving credit
- You're consolidating or refinancing existing balances
Can't decide? You don't have to — yet.
One short form lets a specialist review your revenue, credit range, and goals, then present the programs that actually fit. Have your documents ready to speed up the review.
Compare your real options in one review
MCA, term loan, and working capital — one 60-second form covers all three. No credit pull to start.
Check My Funding Options