Live market data
Pulled from official U.S. government APIs. Click a card to view the source.
TL;DR
A merchant cash advance funds in 24 hours, approves down to a 500 FICO, and is repaid as a percentage of daily deposits — but costs 30–80% APR-equivalent. A term loan funds in 2–7 days, requires a 600+ FICO, and runs 8.99–24% APR with fixed weekly payments. Choose an MCA for emergency speed under 30 days; choose a term loan for planned, multi-month investments.
How they're structured (and why it matters)
A merchant cash advance is technically not a loan — it's a sale of future receivables. You receive a lump sum and repay a fixed total (the factor amount) through a percentage of your daily or weekly deposits. There's no APR; instead you have a factor rate (typically 1.15 to 1.49). Because it's a purchase, not a loan, MCAs are not regulated by state usury caps in most jurisdictions.
A business term loan is a true loan — fixed weekly payment, fixed APR, fixed end date. APRs at Simply Approved Business Loans start at 8.99% for qualified borrowers. Term loans report to business credit and amortize like a mortgage, which means the longer you carry it, the more of each payment goes to principal.
Speed comparison
- •MCA: 24 hours from clean file to funded
- •Term loan: 2 to 7 days for most approvals; SBA up to 60 days
- •Decision turnaround: MCA pre-approval in 4 hours, term loan in 1–2 business days
Cost comparison (real numbers)
On a $100,000 advance with a 1.30 factor over 6 months, total payback is $130,000 — equivalent to roughly 60% APR. On a $100,000 term loan at 14% APR over 36 months, total interest is roughly $23,000.
Always convert offers to cents-on-the-dollar (total cost ÷ principal) before comparing. See our [factor rate guide](/guides/how-to-read-a-loan-factor-rate) for the math.
Qualification thresholds
- •MCA: 500+ FICO, $35K+ monthly revenue, 6+ months in business
- •Term Loan: 600+ FICO, $40K+ monthly revenue, 12+ months in business
- •Both require: business bank account at a bank or credit union, no open bankruptcy
Pros of an MCA
- •Fastest funding in the market — 24 hours
- •Approves credit scores down to 500
- •Payments flex with revenue (slow week = smaller pull)
- •No collateral required
- •Available to businesses as young as 6 months
Cons of an MCA
- •Highest cost product on the market (30–80% APR equivalent)
- •Daily or weekly remittance can pressure cash flow
- •Doesn't build business credit (it's not technically a loan)
- •Stacking multiple MCAs is dangerous and lender-prohibited
Pros of a term loan
- •Lowest cost outside SBA (8.99–24% APR)
- •Predictable fixed weekly payment
- •Builds business credit history
- •Longer terms (1–10 years) reduce monthly burden
- •Interest is fully tax-deductible
Cons of a term loan
- •Slower to fund (2–7 days)
- •Stricter qualification (600+ FICO, 12+ months)
- •Personal guarantee almost always required
- •Prepayment may include a small early-payoff fee
Common mistakes borrowers make
- •Comparing factor rate to APR directly — they aren't the same unit
- •Stacking MCAs to fix MCA cash-flow strain (it gets worse, not better)
- •Taking an MCA for a multi-year investment (you pay the speed premium for nothing)
- •Ignoring the daily debit hold — it can collide with payroll cycles
Run the numbers
MCA / Factor Rate Calculator
Convert a factor rate offer to total cost, daily remit, and approximate APR. Useful for comparing MCA offers against term loan APRs.
Methodology
Total payback = principal × factor. APR-equivalent ≈ (factor − 1) × (365 / term days). This is an approximation — true APR is slightly higher because daily remittances reduce balance over time. APR is defined per the federal Truth in Lending Act (12 CFR § 1026, Regulation Z). MCAs are typically structured as a purchase of receivables and not subject to TILA APR disclosure, but several states (CA SB 1235, NY S5470) require commercial financing disclosures with an APR-equivalent.
Business Term Loan Calculator
Standard amortization: fixed APR, fixed weekly payment. Same formula banks and SBA lenders use.
Methodology
Standard amortization formula: P × r / (1 − (1 + r)−n), where r is the monthly rate (APR / 12) and n is the term in months. APR is the annual percentage rate as defined in the federal Truth in Lending Act (12 CFR § 1026.22). Actual lender quotes may include origination fees that increase APR.
Compare Two Offers (APR-equivalent)
Paste any two offers — MCA, term loan, line of credit — and normalize them to the same yardstick.
Lowest APR-equivalent wins on cost. Cents-on-the-dollar (CoD) shows total cost per dollar borrowed regardless of term length.
Related questions
Related guides
How to Read a Loan Factor Rate (and Convert to APR)
Factor rates look smaller than APR but cost more. Here's how to read them and convert to a comparable annual cost.
Business Loan Rates Explained (1970)
APR, factor rate, and total cost of capital — what the numbers actually mean and how to compare offers across products.
Bank vs Alternative Lender: Which Should You Choose?
Banks are cheaper but slower and stricter. Alternative lenders are faster but pricier. Here's how to choose based on use case, time horizon, and qualification.
Sources & references
- Bank Prime Loan Rate (DPRIME)— FRED · Federal Reserve Bank of St. Louis
- Federal Funds Effective Rate (DFF)— FRED · Federal Reserve Bank of St. Louis
- Daily Treasury Par Yield Curve Rates— U.S. Department of the Treasury, Fiscal Data
- Commercial & Industrial Loans, All Commercial Banks (BUSLOANS)— FRED · Federal Reserve
- Small Business Credit Survey— Federal Reserve Banks
- Truth in Lending Act, Regulation Z (12 CFR § 1026)— Consumer Financial Protection Bureau
- California Commercial Financing Disclosure (SB 1235)— California Department of Financial Protection and Innovation
- New York Commercial Finance Disclosure Law— NY Department of Financial Services