Merchant Cash Advance vs. Business Line of Credit: Which is Right for You?

When your business needs quick access to capital, two popular solutions often come up: Merchant Cash Advances (MCAs) and Business Lines of Credit (LOCs). Both can provide the funds you need to keep operations moving, but they work very differently. Understanding the differences is essential to choosing the right option.

What is a Merchant Cash Advance?

A Merchant Cash Advance (MCA) isn’t technically a loan—it’s an advance against your future revenue. Lenders provide you with a lump sum of cash in exchange for a percentage of your daily or weekly sales until the advance is repaid.

Key Features

• Fast approval—sometimes within 24 hours
• Payments tied to sales performance
• No collateral required
• Approval based on revenue, not credit

Best For

• Businesses with high credit card sales
• Companies that need quick funding without lengthy applications
• Owners with less-than-perfect credit

What is a Business Line of Credit?

A Business Line of Credit works more like a credit card. You’re given access to a set credit limit, and you can draw from it as needed. Interest is only charged on what you use, and you can repeatedly borrow and repay as long as you stay within the limit.

Key Features

• Flexible access to funds over time
• Lower interest rates compared to MCAs
• Requires stronger credit and financial history
• Can be secured or unsecured

Best For

• Businesses with ongoing or unpredictable expenses
• Companies that want to manage cash flow with flexibility
• Owners who qualify for traditional credit products

MCA vs. LOC: A Side-by-Side Comparison

Which Option Should You Choose?

• Choose an MCA if: You need fast cash, your credit isn’t perfect, and you’re comfortable with higher costs for convenience.
• Choose a LOC if: You want flexibility, lower long-term costs, and you qualify with stronger financials.

The Bottom Line

Both Merchant Cash Advances and Business Lines of Credit can help bridge financial gaps, but the right choice depends on your business’s situation.

If you’re facing urgent expenses and need funding in less than 24 hours, an MCA could be your lifeline. If you’re planning for long-term growth and have solid financials, a LOC gives you ongoing flexibility at a lower cost.

At Stern Rock Funding, we specialize in helping businesses like yours find the right funding—whether that means fast revenue-based advances or tailored credit solutions.