Side by side
| Criterion | Merchant cash advance | Revolving credit facility |
|---|
| Repayment method | Percentage of daily or weekly card sales | Repaid at your discretion within the term |
| Speed to funds | Often within days | Typically one to three weeks to set up |
| Eligibility basis | Card sales history | Broader credit and trading assessment |
| Cost structure | Factor rate applied to the advance | Interest rate plus possible commitment fee |
| Suitable businesses | Retail, hospitality, other card-heavy trades | Any business with an established banking relationship |
| Reusability | New advance typically needed once repaid | Can be redrawn repeatedly within the limit |
How repayment behaves differently
Because a merchant cash advance takes a fixed slice of card sales, repayments fall automatically in quiet periods and rise in busy ones, which can suit seasonal businesses like hospitality or retail. There is no separate monthly repayment to manage, since it happens at the point of sale.
A revolving facility gives you control over when you repay, within the limits of the agreement, which suits businesses that want to manage cash flow actively rather than have repayment set by sales volume.
Cost and access
Merchant cash advances are often quicker to arrange and more accessible to businesses with a shorter trading history or a less conventional credit profile, but the cost, expressed as a factor rate rather than an annual rate, can be higher than a revolving facility over a comparable period.
Revolving credit facilities usually require a more established relationship and trading record but tend to be cheaper overall and more flexible in how they are used, not being tied to any one sales channel.
When to use each
A merchant cash advance is worth considering for a short, specific need where speed matters and card sales are strong and consistent. A revolving facility is better for ongoing, flexible access to working capital across a wider range of business types.
The short answer
Use a merchant cash advance for fast, sales-linked funding in a card-heavy business, and a revolving facility where lower cost and repayment flexibility matter more than speed.
Questions
Is a merchant cash advance a loan?
It is structured as a purchase of future card takings rather than a conventional loan, which is why it is not always regulated in the same way.
Does a merchant cash advance affect my credit score?
It can appear on business credit files depending on the provider, so it is worth asking how the facility will be reported before proceeding.
Which costs less overall?
A revolving credit facility is usually cheaper over time for businesses that qualify, since factor rates on cash advances tend to be higher than typical revolving credit pricing.
Not sure which route fits? Describe the requirement once and we will structure it and approach the providers whose criteria match. No upfront fees — charges are due only once funding is in place.
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