Merchant Cash Advance vs Business Credit Card
A business credit card is usually cheaper than a merchant cash advance for small amounts you can pay down within a few months. An advance puts more cash in your account at once and doesn't depend as much on your personal credit. Use the card for small, short gaps. Consider an advance when the amount is bigger than your limit or the card isn't available.
How do an MCA and a business credit card compare?
| Merchant cash advance | Business credit card | |
|---|---|---|
| What you get | A lump sum in your bank account | A revolving limit |
| Cost | Fixed fee set by the factor rate | Interest on the balance you carry |
| Paying early | Saves only if there's a discount | Stops interest right away |
| Payments | Daily or weekly | One monthly minimum |
| Approval leans on | Bank deposits | Personal credit and income |
| Cash access | Yes | Cash advances cost extra |
| Reuse | No, you renew | Yes, as you pay down |
Which one is faster to get?
An MCA funds faster on a clean file and leans on your deposits. A business card leans on your personal credit, and the card arrives days after approval. Speed matters less than the payment, so compare that first.
What does each cost in dollars?
Say you need $15,000 for three months. On a card at a 24% annual rate, three months of carrying the balance while paying it down costs roughly $600 in interest. An advance of $15,000 at a 1.30 factor costs $4,500, no matter how fast you pay, unless there's an early payoff discount. For a short, small need, the card wins by a wide margin.
Now say you need $60,000 and your limit is $20,000. The card can't cover it. That's where an advance or a line of credit comes in.
When does each one fit?
- Card: small amounts, paid off within a few months, good personal credit.
- Advance: larger amounts, strong deposits, a need that can't wait, credit that won't get a big enough limit.
- Either way, check the monthly or daily payment against your slowest month.
- Don't use a card cash advance to cover advance payments. It stacks two costs.
Applying is free, and you never pay Afterfirst a fee. The funder pays our commission only if a deal funds, and the amount is in the offer paperwork before you sign.
Questions about your file?
Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.