Merchant cash advance

A merchant cash advance is a form of business funding in which a funder provides a lump sum in exchange for a stated amount of the business's future receivables. The business remits a portion of its revenue, often as a fixed daily or weekly debit, until the agreed amount has been delivered. It is usually structured as a purchase of receivables rather than a loan, and the total cost is commonly expressed as a factor rate on the amount advanced rather than as an interest rate.

Costs and terms vary widely by funder and by business. The useful comparison for an owner is the total amount to be remitted, over the period it will actually take, against the margin on the work the funding carries. Read the agreement in full, including any personal guarantee and default terms.