MCA vs. Business Loans

Are you a small-business owner, looking for the capital needed to promote business growth? If so, you may be considering your business funding options and the difference between them. There are several traditional and non-traditional or alternative lending methods available. Deciding what business lending option is right for your business can make all the difference. So, before you act, you may want to consider your options.

Traditional Business Loans

A traditional business loan or a commercial loan is a debt-based funding agreement between a business entity and a financial institution such as a bank or credit union. It is typically used to fund capital expenditures or operational expenses that your business may not be able to afford.


How a Business Loan Works

Business loans are granted in a variety of industries to help with short-term funding needs that can facilitate the operating process of a business. The funds are typically used for operational costs and the purchasing of equipment, but may also be used to meet more basic needs, like payroll or purchasing supplies or inventory.

Securing a Business Loan

Like any other traditional loan from a bank or credit union, the creditworthiness of an applicant is a key factor, as well as the collateral a business owner has to secure the loan. In most instances, the business that is applying for a loan will be required to present documentation in the form of balance sheets and other similar documents. This will help to provide proof that the business in question has a favorable and consistent cash flow to allow repayment of the loan according to the terms set forth. The business in question is you.

Business Loan Approval

If you met the stringent requirements for approval, you will be expected to pay an interest rate that falls within the federal guidelines at the time the loan is issued. Traditional lenders, providing commercial loans often require monthly financial statements throughout the life of the loan. You may even be required to insure any larger items purchased with the funds you receive.

Business Loan Denial

The problem with this type of loan, for many business owners, are the upfront costs that are incurred, as well as the credit history that is required for approval. Without the collateral and good/excellent credit score that is expected, business owners, like you, are getting denied funding. Because of this, smaller businesses, are relying on other alternative lending products, such as merchant cash advances.

Merchant Cash Advances

In the past, a merchant cash advance was typically used in businesses that primarily relied on revenue from credit and debit card sales. But, merchant cash advances have evolved. They are now available to other businesses as well. Whether or not your business relies heavily on credit card or debit card sales, does not matter! You still have access to the funds a merchant cash advance can offer. You can also get an upfront sum of cash in exchange for a percentage of your future sales.

A merchant cash advance (MCA) can provide funding based on your business’ sales volume, while commercial funding is offered at a fixed amount. MCAs are paid back by a percentage of your business’ sales while commercial lending is paid back on a set monthly installment schedule.

Merchant Cash Advance Repayment Schedule

With MCA business loans, you can structure repayment schedule in one of two ways. Get an upfront sum of cash in exchange for a percentage of your future credit and debit card sales, or get upfront cash that is repaid by remitting fixed daily or weekly debits from your bank account, in the form of an ACH withdrawal.

The Difference in Structured Repayments

Instead of making a fixed payment each month from a bank account over a set period of time with a traditional bank loan, you make daily or weekly payments, plus fees, until the advance is paid in full with a merchant cash advance.

Merchant Cash Advance Fees

How much you’ll pay in fees is based upon your ability to make repayment on the merchant cash advance you receive. A factor rate is determined based on your risk assessment. The higher the factor rate or risk you are, the higher your fees will be.

The Breakdown on Merchant Cash Advance Repayment

Percent of Credit Card Sales

The lender, Nextwave Funding, will deduct a percentage of your credit or debit card sales until the agreed-upon amount you receive has been repaid in full. To begin, you apply for an amount of money that you require and provide your requirements. At that time, your application and bank statements will be reviewed to determine a factor rate. Once the factor rate has been assigned, you will be provided with an amount, as well as an agreement that is typically repaid over a 3 to 12 month period.

The predetermined percentage of sales for your business is an estimate based on your projected monthly revenue. Since your projected sales are only an estimate, and your sales can fluctuate, the length of your repayment schedule can be shorter or even longer than you may have been expected. Simply meaning, the higher your credit card sales, the faster you’ll repay the merchant cash advance.

Fixed Daily Withdrawals

This type of MCA agreement requires a daily or weekly payment to be withdrawn, based on an estimate of your businesses’ monthly revenue. Unlike the repayment structure tied to credit or debit card sales, your payment will not fluctuate with your sales. You will be required to pay the same amount regardless of sales. That means whether sales are up or down, you will still be required to make a payment on the merchant cash advance.

Why A Merchant Cash Advance Has Become So Popular

  • Easy application Process – Get started online or over the phone
  • Easy Approval Process – no collateral or credit needed
  • Minimum Requirements – one year in business, $10,000 in monthly revenue
  • Unsecured Funds – will never have to forfeit any personal or business assets
  • Fast Cash – business funding provided within 24 to 72 hours
  • Repayment Options – ability to decide between 2 structured repayment schedules
  • No Spending Restrictions – Use the funds to make purchases, cover operational costs, or satisfy payroll


Having the facts needed to make an informed decision on your business funding options should help you to make the right decision for your business. At Nextwave Funding, we are here to assist in your financing needs today. Simply, contact one of our funding advisors to get started now.

Why Choose Nextwave Funding?

  • Direct source of funding
  • Credit challenges not a problem
  • We service and manage the account
  • Broad national reach
  • Provided hundreds of millions in funding to businesses over the past 5 years
  • Serving businesses of all sizes

Evaluate and Offer

Within 24 hours after application is submitted, a Funding Advisor will provide you with a documented and clear set of terms for the amount of an advance available, the time frame of the transaction, and any/all costs associated with the advance.

Begin Online or By Phone!

Help with your business funding needs is only a few clicks or phone call away. Our online form makes it easy to start anytime, day or night. If you’d prefer to speak with someone, our Funding Advisors are friendly and standing by to walk you through the process.

Receive Funding

Working with our contract team, you will review the agreements, coordinate all documentation via web and phone, and have monies wired to you in a matter of days.