Merchant Cash Advance vs Working Capital Loan: Which May Fit a Business With Lower Credit?

Businesses with lower personal credit may still have financing options, but two commonly discussed products—merchant cash advances and working capital loans—can have different qualification profiles.

What Are Typical Merchant Cash Advance Requirements?

Merchant cash advances commonly use more flexible credit standards. Typical requirements in the funding guidance include personal credit around 500 to 600+, approximately three to six months in business, regular credit or debit card sales and consistent monthly revenue.

This can make an MCA potentially relevant to businesses such as restaurants, retailers and other companies with recurring card-based sales. However, merchant cash advances are also described as generally among the most expensive forms of business financing.

What Are Typical Working Capital Loan Requirements?

Working capital loans commonly look for approximately 600+ personal credit, six to twelve months in business and around $50,000 to $100,000 in annual revenue.

Funding providers may also evaluate business bank deposits, cash flow and current obligations before deciding whether additional financing is appropriate.

Which Option May Fit Better?

The right answer depends on credit, operating history, revenue, deposit consistency, card-sales activity and the cost and structure of the available financing. Easier qualification does not automatically mean that a product is the better financial choice.

If your business needs capital and your credit profile makes traditional bank financing difficult, connect with EIN Business Funding to explore potential working-capital and alternative funding options.

FAQs

What credit score may an MCA provider consider?
The funding guidance identifies approximately 500 to 600+ as a common merchant cash advance credit range.

What credit score is commonly associated with working capital loans?
Approximately 600+ personal credit is a common working-capital benchmark.

Are merchant cash advances usually cheaper than working capital loans?
The funding guidance describes merchant cash advances as generally among the most expensive business financing options, so owners should evaluate the complete financing structure carefully.