While an MCA might make sense for a business that needs cash quickly to take advantage of a short-term opportunity, it’s critical to make sure the costs of the merchant cash advance otherwise make financial sense for the business. Because qualifying criteria is much less stringent than traditional small business lenders, an MCA comes with a premium cost. Nevertheless, there are business owners who successfully use this option to access capital for their businesses.

NOTE: Because a merchant cash advance is not a loan and providers do not report your payment history to the business credit bureaus, it does not help build or strengthen a business credit profile. Additionally, because rates vary from provider to provider, and can be much higher than other types of financing, it’s important to understand all the terms before signing on the dotted line.