Answer

What is a merchant cash advance and how does it work?

A merchant cash advance gives you a lump sum repaid as a fixed percentage of your daily card takings. Repayment flexes with sales, but the cost expressed as a rate is often high — compare it carefully.

2 min read

% of card salesHow you repay

FlexesWith takings

High costWatch the rate

What it means

A merchant cash advance (MCA) advances a lump sum that you repay by handing over an agreed slice of each day's card sales until a fixed total is cleared. Because repayment tracks takings, quiet days cost less — but the total is set by a factor rate, not an interest rate, and the effective cost is often steep.

When to be cautious

An MCA suits card-heavy businesses (retail, hospitality) wanting repayment that flexes with trade. The catch is cost: convert the factor rate to a true annual figure with the MCA calculator before committing, because it frequently works out dearer than a business loan. Compare the two on total repayable, and see MCA vs a business loan.

What it means for you

Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.

Frequently asked questions

Is a merchant cash advance cheap?

Usually not, once you convert the factor rate to an effective annual cost. The flexible repayment is convenient, but you often pay a premium for it. Always compare the total repayable against a standard loan.

Who is a merchant cash advance for?

Businesses with steady card takings that value repayment flexing with sales — cafés, shops, salons. If your income is not card-based or you want the lowest cost, a term loan usually serves better.