Merchant cash advance
Working capital priced on your sales, not just a credit score.
A merchant cash advance (MCA) is a sale of part of your future receivables to a funder. We explain the real cost in plain numbers, then connect eligible ITIN holders and foreign-national business owners with third-party funders. Requirements vary by funder and product.
- Structure
- Purchase of future receivables
- Pricing
- Factor rate, not interest
- Remittance
- Daily or weekly, from sales
The basics
What a merchant cash advance is — and what it is not
With an MCA, a funder pays you a lump sum today in exchange for a fixed, larger amount of your future receivables — usually card sales or bank deposits. Legally it is structured as a purchase of receivables, not a loan, so it is priced with a factor rate instead of an interest rate.
Because funders look closely at your recent sales and deposits, an MCA can be an option for businesses whose owners have a limited US credit history. That flexibility comes at a cost, which is usually higher than bank or SBA financing. Knowing the full cost before you sign is the most important step.
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Not a loan
You sell a set amount of future receivables. Terms such as reconciliation rights depend on the contract, so read them carefully.
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Factor rate pricing
Cost is a fixed multiple of the advance. It does not shrink if you pay early unless the contract offers an early-payoff discount.
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Sales-based review
Funders focus on deposits, card volume, time in business and existing obligations, along with other factors.
Understanding cost
Factor rate vs. estimated annualized cost
The factor rate tells you the total amount you will remit. It does not tell you how expensive the money is per year. The faster the purchased amount is collected, the higher the estimated annualized cost — even with the same factor rate.
Compare offers by total cost and estimated annualized cost together. Ask whether origination, underwriting or ACH fees are deducted from the advance, because they reduce the cash you actually receive.
Worked example
$50,000 advance at a 1.35 factor rate
Factor rate × advance = purchased amount. The difference is your cost of funding.
- Advance received
- $50,000
- Factor rate
- × 1.35
- Purchased amount (total remitted)
- $67,500
- Total cost of funding Before any origination or other fees
- $17,500
Illustrative arithmetic only, not an offer. Remitted in equal business-day payments over about 6 months, this example works out to roughly 250% estimated annualized cost (illustrative); over about 12 months, roughly 90%. Fees and actual remittance timing change the result.
How you pay it back
Fixed remittance vs. revenue-based holdback
| Feature | Fixed daily or weekly remittance | Revenue-based holdback |
|---|---|---|
| How it is collected | A set ACH debit from your business bank account each business day or week. | A percentage of card sales or deposits (the holdback, e.g. 10%) is collected as you earn. |
| When sales dip | The payment stays the same unless you request a reconciliation under the contract. | Payments fall with sales, so collection takes longer but cash flow is protected. |
| Predictability | Easy to budget; harder on slow weeks. | Varies week to week; total remitted stays fixed. |
| Good fit for | Businesses with steady, predictable daily or weekly revenue. | Seasonal or card-heavy businesses with uneven sales. |
For ITIN holders and foreign-national owners
What funders typically ask for
Funding options for eligible ITIN holders and foreign-national business owners. Requirements vary by funder and product.
- US business bank account
- Usually in the business name, with recent statements (often the last 3–6 months) showing regular deposits.
- Time in business
- Many funders look for several months of operating history; some require longer. Typical; varies.
- Monthly deposits
- Consistent monthly revenue or card volume. Minimums differ by funder. Typical; varies.
- Owner identification
- Government-issued ID and an ITIN or other taxpayer identification, depending on the funder.
- Business documents
- Formation documents, EIN letter and, in some cases, a business lease or processing statements.
- Existing obligations
- Details of any current advances or loans, including remaining balances and payment amounts.
Typical requirements only; each funder sets its own criteria and makes its own decision. tsmartcash is not a lender and does not make credit decisions.
MCA cost calculator
Adjust the inputs to see the purchased amount, total cost and an estimated annualized cost (illustrative).
Your business
Card sales make a daily, revenue-based holdback common.
Payments on other advances, per business day.
Advance
Illustrative range for this industry: 1.30–1.49
Payments start the next ACH business day.
Repayment
Results are estimates for education only and are not an offer or commitment to fund.
By industry
How MCAs work in your industry
Revenue patterns differ by business. These guides cover what funders look at in each sector.
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Health centers & clinics
Bridge insurance reimbursement gaps for clinics, dental offices, med spas, PT and home health.
Learn more -
Bus & transportation operators
Charter, school-contract, tour and shuttle operators managing seasonal and contract revenue.
Learn more -
Restaurants
Card-heavy sales, daily variation and seasonality for restaurants, cafes and food service.
Learn more -
Ethnic & independent retailers
Grocers, markets and shops with cash-heavy sales, inventory needs and multilingual owners.
Learn more
How tsmartcash helps
From first call to funder decision
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Step 1: Tell us about your business
Share your industry, monthly deposits, time in business and what the funds are for.
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Step 2: Document review
We help you gather bank statements and business documents in the format funders expect.
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Step 3: Compare options
If funders make offers, we walk through factor rate, fees, remittance and estimated annualized cost with you.
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Step 4: Funder decides
The funder makes the final decision and contracts directly with your business.
Merchant cash advance FAQ
Is a merchant cash advance a loan?
No. An MCA is generally structured as a purchase of future receivables. You receive a lump sum and the funder collects a fixed purchased amount from your future sales or deposits. The exact legal terms depend on the contract.
Can I get an MCA with an ITIN instead of an SSN?
Some funders work with eligible ITIN holders and foreign-national business owners who have a US business and business bank account. Requirements vary by funder and product, and approval is never guaranteed.
What is the difference between a factor rate and an interest rate?
A factor rate is a multiple applied once to the advance (for example 1.35 × $50,000 = $67,500). An interest rate accrues over time. To compare an MCA with other financing, look at the estimated annualized cost, which depends on how quickly the amount is remitted.
Do funders check credit?
Most funders review credit in some form, along with bank statements, deposits and time in business. Credit history is usually one factor among several rather than the only one.
Does paying early reduce the cost?
Not automatically. The purchased amount is usually fixed. Some contracts offer an early-payoff discount; ask for it in writing before you sign.
What happens if my sales drop?
With a revenue-based holdback, remittances fall with sales. With a fixed remittance, many contracts let you request a reconciliation based on actual receipts. Contact the funder early if revenue changes.
Is tsmartcash the funder?
No. tsmartcash is not a lender. We help business owners understand their options and connect them with third-party funders, who make their own decisions.
Want a second opinion on an MCA offer?
Share your numbers and we will walk through the cost, remittance and alternatives with you — in plain language.