A merchant cash advance (MCA) is the purchase of a portion of a business's future revenue at a fixed cost — it is not a loan. Instead of borrowing money and repaying it with interest, the business receives a lump sum today and remits a small, agreed share of its revenue until a set total is delivered. That one distinction shapes everything else about how it works.
How a merchant cash advance works
A funder reviews your recent business bank deposits, offers a lump sum, and sets a total repayment amount using a factor rate rather than an interest rate. You receive the funds — often within 24 to 72 hours — and repay through small daily or weekly remittances, typically a fixed ACH amount or a percentage of deposits, until the agreed total is met.
What it costs: the factor rate
Cost is expressed as a factor rate, not an APR. For example, $50,000 at a 1.3 factor rate means $65,000 total, fixed from day one — no compounding and no accruing interest. Because the cost is fixed rather than time-based, a factor rate should never be read as an interest rate; the two measure different things.
How repayment works
There is no fixed monthly payment. Remittance is a small daily or weekly amount tied to your deposits, so it eases in slow periods and rises when business is busy. That flexibility suits seasonal and uneven-revenue businesses, and it means the advance is paid back over a relatively short window.
How approval works — and who it fits
Because an MCA is a purchase of revenue rather than borrowed money, approval is based on your bank deposits and revenue, not your credit score or collateral. That makes it a fit for businesses that need capital fast, have uneven revenue, or have been declined by a bank. It is generally more expensive than a bank loan, so it is best for speed and access rather than the lowest possible cost. Not all applicants qualify.
The bottom line: a merchant cash advance is a fast, flexible small business loan alternative — the purchase of future revenue at a fixed cost, not a loan. Y Millennial Funding is a direct funder of merchant cash advances and revenue-based funding for businesses doing $25,000 or more in monthly revenue.