Merchant Cash Advance vs Business Loan: Which Should You Choose?

Both put cash in your account, but they behave very differently. The right choice depends on how you take payments and how predictable your income is.

How repayments differ

A merchant cash advance takes a percentage of card sales, so repayments flex with trade. A business loan is repaid in fixed monthly instalments over a set term, regardless of takings.

Cost

A loan charges interest that reduces as you repay, often making it cheaper overall. An MCA charges a fixed fee via a factor rate, which can be more expensive but buys flexibility.

Side-by-side

• Repayment: MCA flexes with sales; loan is fixed.
• Cost basis: MCA = factor rate fee; loan = interest/APR.
• Best for: MCA = card-heavy, seasonal trade; loan = predictable income and planned spend.
• Credit: MCA is more forgiving of weaker credit.

Quick decision guide

Choose an MCA if most income is by card and you want repayments that ease in quiet periods. Choose a loan if you want the lowest likely cost, predictable budgeting and a clear end date.

This article is general information, not financial advice. Eligibility, rates and terms vary by lender and your circumstances. The Loans Hub is a finance broker, not a lender.