A low credit score can make traditional loans impossible. A bad credit merchant cash advance (MCA) offers a lifeline. It’s not a loan; you sell a piece of your future sales for immediate cash. Funders focus on your daily revenue, not your FICO score. This makes it a great tool for businesses with strong sales but a rocky credit history.
An MCA is a sale of future revenue. A funding company gives you a lump sum. In return, you pay them a small percentage of your daily credit and debit card sales until the deal is settled. The process centers on your business's cash flow. Lenders look at your daily sales as the most important sign of your ability to repay. A low credit score isn't an automatic "no." Consistent sales prove your business is healthy. This means you can get funded in just 24 to 48 hours.
The global MCA market is growing, a clear sign of its popularity among small businesses.
When you apply, lenders evaluate your business's current health, not your past. They focus on consistent revenue. For example, a restaurant with a 580 credit score might be rejected by a bank. But if it makes $2,500 in daily sales, an MCA provider sees a low-risk candidate.
MCAs use a factor rate, not an APR, to determine cost. It's a simple multiplier. Advance Amount x Factor Rate = Total Repayment Amount If you get a $20,000 advance with a 1.3 factor rate, you repay $26,000. The cost is $6,000. It's simple and fixed.
Repayment is flexible. It can be a percentage of daily sales, so payments rise and fall with your revenue. Or, it can be a fixed daily withdrawal. This is predictable but less flexible.
While an MCA is fast, consider alternatives like equipment financing or invoice financing if they fit your needs. They can offer better terms.
To apply, you’ll need three to six months of bank and credit card processing statements. Underwriters look for consistent deposits and healthy daily balances. Avoid overdrafts and negative balance days.
Finding the right funding partner simplifies this process. An advisor can shop your application to multiple lenders, creating competition that gets you better offers. They help you understand the terms and choose the best deal for your business. An MCA is a powerful tool for quick capital, especially when bad credit closes other doors.