Funding options
Merchant cash advance
An advance is not a loan. A funding partner buys a slice of your future sales at a discount, and you remit it back daily or weekly. It is quick, it is usually the easiest shape to arrange early, and it is expensive money.
About two minutes. No credit pull to start. Free to you. Funding partners pay Addy for the introduction. Not an offer or an approval.
- How it is priced
- A factor rate, not an interest rate. As an illustration, $40,000 at 1.30 means remitting $52,000.
- How you remit
- A fixed daily or weekly debit, or a share of each day’s card sales. Both go by merchant cash advance.
- What owners use it for
- Short, urgent gaps — a repair that stops work, stock for a job already sold, a payroll run that cannot wait.
Amounts, rates and terms come from the funding partner and depend on what your file shows. I do not set them, and I cannot promise them.
What it is
The plain version.
A merchant cash advance is a purchase, not a loan. The partner buys a fixed dollar amount of your future receivables and pays you less than that amount today. The difference is the cost of the money, and it is set at the start by a factor rate.
Because it is a purchase rather than credit, it is priced and underwritten differently: the question is less "will you repay" and more "do the sales exist". That is why an advance is often available to a business too young for a line of credit, and why it costs several times as much.
Remittance starts almost immediately and comes out daily or weekly. That is the part owners underestimate. The cost is one number; the weekly bite out of cash flow is what actually decides whether an advance was a good idea.
What the money costs
- Advance
- $40,000
- Factor rate
- 1.30
- You remit in total
- $52,000
- Cost of the money
- $12,000
Illustration only, not a quote. Real terms come from a funding partner and depend on your cash flow. Fees can sit on top of the factor rate — ask what the total is before you sign.
If that $52,000 were remitted over roughly eight months of daily debits, it would come to about $310 a working day, every working day, whether or not the week was good. Check a number like that against your thinnest week, not your best one.
Try the math
Put your own numbers in.
The card above is my illustration. This one is yours: move the amount, and if somebody has already quoted you a factor rate, type it in and see what it costs.
The arithmetic
- Advance
- $40,000
- Factor rate
- 1.30
- You remit in total
- $52,000
- Cost of the money
- $12,000
An illustration, not a quote: nobody has offered you these terms. Real terms come from a funding partner and depend on your cash flow, and fees can sit on top of the factor rate.
See my optionsHow it works
Four steps, and the one that surprises people is the last.
- 1
A partner reads your sales
Bank deposits, card volume, how steady both are. The file is about the money moving through the business, not a business plan.
- 2
You are offered an amount and a factor rate
The factor rate fixes the total you remit on day one. It does not fall if you remit faster, unless the contract says so in writing.
- 3
The money lands
There is less to underwrite than a line of credit, so this is usually the shorter process. How quickly, though, is the partner’s call and not mine.
- 4
Remittance starts
A fixed daily or weekly debit, or a percentage of card sales, until the purchased amount is delivered in full.
What partners may read
What a funding partner may look at.
- Monthly deposits, and how consistent they are
- Card volume, if you take cards, and what share of revenue it is
- Negative days and bounced payments in the last few months
- Advances already outstanding — taking a second one on top is stacking, and it is where owners get into trouble
- How long the business has been trading
- The industry, and whether your customers pay at the door or on terms
My read of what underwriting tends to weigh, not a list anyone published and not a test I score. Every partner sets its own criteria and none has told me what they are. Partners underwrite and decide; my job is to make the request readable so the answer comes back either way.
When it fits
- The money buys something that earns quickly — parts for a job already sold, a repair to the truck that is stopping work
- You have been turned down for cheaper credit and the cost of waiting is higher than the cost of the advance
- Your sales are steady enough that a daily or weekly debit will clear without starving the account
When it is the wrong tool
- You are covering a hole that keeps reopening. An advance turns this month’s shortfall into a daily payment on top of next month’s
- You are already remitting on one advance. Stacking a second is a common way a business ends up unable to pay either
- A line of credit might be open to you after a few months of preparation. The same money costs several times less
- The remittance would not clear in your slowest week. Test it against that week before you sign
Questions
The ones owners actually ask.
Still stuck? The guides go further:
How does a merchant cash advance work?
A funding partner buys a fixed amount of your future receivables and pays you less than that amount today; the difference is the cost, set on day one by a factor rate. Remittance starts almost at once, as a fixed daily or weekly debit from the business account or as a share of each day’s card sales, until the purchased amount is delivered in full. It is a purchase, not a loan, and the total does not fall if you remit faster unless the contract says so. The advance, with the working.
Is a merchant cash advance a loan?
No, and the difference is not cosmetic. It is the purchase of future receivables, so it is priced by a factor rate rather than interest and is not governed by the rules that apply to lending in most states.
What is a factor rate?
A multiplier fixed at the start. $40,000 at 1.30 means $52,000 is remitted in total, so the money costs $12,000 — an illustration, not a quote. Unlike interest, it does not accrue over time — which is why repaying early usually saves you nothing unless the contract specifically says it does.
What does it cost as an APR?
An advance has no APR, because it is not credit. The arithmetic above is the comparison I can actually show you: $6,000 to use $20,000 for a few months, against about $1,400 in interest on the same amount over six months on a line of credit. Annualise the first and it is far above the second. That is why I suggest trying for a line first.
Can I repay it early and save money?
Usually not by default. The amount you remit is fixed at the start. Some partners offer a discount for early completion; it has to be in the contract, so ask before you sign rather than after.
Will it show on my credit file?
It varies by partner. Many do not report the advance itself, but a personal guarantee is common, and a default is collectable against the owner. Ask directly.
What is stacking?
Taking a second advance while the first is still being remitted. Two daily debits out of the same account is a common route to a business that cannot pay either one, and many contracts forbid it outright.
Get funding options
Tell me about the business.
One form covers every shape on the shelf. Tell me about the business and roughly how much you're after; partners who work with businesses like yours take it from there. About two minutes, no credit pull from me.