A merchant cash advance (MCA) is a type of business funding or loan that is repaid by the lender taking a percentage of the businesses' daily credit or debit card income, directly from the payment processor. The term Merchant Cash Advance is commonly used to describe a variety of small business financing options characterized by purchasing future sales revenue in exchange for short payment terms (generally under 24 months) and small regular payments (typically paid each business day) as opposed to the larger monthly payments and longer payment terms associated with traditional bank loans.
This type of funding is used where a merchant is unable to obtain financing from a bank and will typically be a lot more expensive in terms of the equivalent interest than a typical bank loan. It gives the lender a stake in the business income instead of a regular loan repayment.