Merchant Cash Advance (MCA)
A merchant cash advance is financing structured as a purchase of a business's future revenue rather than a loan. The funder advances a lump sum and collects a fixed daily or weekly amount, or a percentage of sales, until a larger total (the advance times a factor rate) is repaid. Because it is framed as a purchase, it avoids most lending regulation and usury caps.
Why it matters
The purchase framing is why MCA costs can reach the equivalent of 60 to 300 percent APR legally, and why the tools for getting out of one differ from ordinary debt relief. Whether a given advance is truly a purchase or a disguised loan is the central question in much MCA litigation.
