Business Cash Advance vs Small Business Loan

What are the main differences between business cash advance and a small business loan?

Let’s start off with what is a Business Cash Advance.  Business Cash Advance is also known as “merchant cash advance” or “merchant funding”, it is a tool used by businesses who currently is accepting credit card payments.  Your business will need to have historical credit card processing for this type of loan program. Typically small business loans are 50% less expensive than a business cash advance program. If your company is not processing credit card payments, you won’t qualify for a business cash advance program. A business cash advancetakes your projected future credit card transactions and turns it into immediate cash.  There is no fixed monthly payments, but instead the payments are based on small fixed percentage of your future credit card receivables. So if your business had a slow day in credit card transactions the payment would be based off that amount and you wouldn’t be tied to a set payment. This type of repayment is a huge benefit and helps the business with their cash flow management. The fact that there is no collateral required for this program is another huge plus. There is no restrictions with the use of the proceeds, unlike some loans you would get from your local bank. One major difference is also the time frame, you can have the capital in your business bank account as soon as 5 business days!  The approval process can happen as soon as 2 business days, and the paperwork is a fraction of what would be required from getting a loan from your local bank.

Now before we go over the specifics of a small business loan we need to clarify that a business loan with First Capital Business Finance is not the same as acquiring a business loan from your local bank.  In fact, we will have a post later about the differences between those two types of loans. But for this post we are comparing the business cash advance and a business loan with First Capital Business Finance.  The business loan offered by First Capital Business Finance does not require your company to have credit card processing.  The loan is calculated on your historical gross revenue of the company and those sales can be from cash, check or credit.  Since there is no requirement for your company to have credit card sales, this loan does have a fixed payment.  That revenue can be from cash, checks, wires or credit card payments.  Merchant cash advance will give you the cash you now against your future credit card sales.  The repayment process is simple, there will be a small fixed payment based off a percentage of your future credit card sales.  Unlike applying for a loan from your bank, the loan application process with First Capital Business Finance is less paperwork, lower credit score requirements, and faster approval and funding timelines.

If you’re interested in hearing more about our loan programs, please feel free to call First Capital Business Finance 888-565-6692 and one of our loan experts will be happy to answer any of your questions.



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