Repaid as a share of card takings
Merchant cash advances, with the real cost shown as an annual rate.
Repayments flex with your takings, but the cost is high. Your broker converts the factor rate into an annualised figure and shows you the cheaper options first.
What is a merchant cash advance?
A merchant cash advance is a lump sum advanced against your future card sales, repaid by taking an agreed percentage of each day’s card takings until a fixed total is repaid. It is priced with a factor rate rather than an interest rate, and it is one of the most expensive forms of business funding.
A merchant cash advance works differently from a loan. You receive, say, $50,000 and agree to repay a fixed total — perhaps $62,500 at a 1.25 factor — by handing over 10–20% of daily card settlements until the balance clears. Busy weeks repay faster, quiet weeks repay slower, and there is no fixed end date. For a café, salon or retailer with heavy card turnover and seasonal swings, that self-adjusting behaviour genuinely fits the business.
The cost is the problem. A 1.25 factor repaid over six months is not a 25% annual rate — because the balance is falling the whole time, the annualised equivalent is often 45–60% or more. Repaying early does not reduce what you owe, since the total is fixed at the outset. That combination makes MCAs expensive relative to almost every alternative, including unsecured term loans, overdrafts and invoice finance.
Lyft Money will arrange a merchant cash advance where it genuinely fits, but our broker’s job is to show you the annualised cost against those alternatives first. If your business would qualify for an unsecured business loan at 15–20% over two years, we will say so, and we will explain exactly why the MCA looks cheaper on paper than it is in practice.
Merchant cash advance at a glance
| Amount | $5,000 – $300,000 |
|---|---|
| Term | 3–18 months |
| Rate type | Factor rate |
| Indicative rates (Q3 2026) | 25% – 60% p.a. · see rate history |
| Security | Unsecured (guarantee may apply) |
| Repayments | A set percentage of daily card settlements |
| Typical speed | 24–48 hours |
| Best for | Card-heavy retail and hospitality businesses with seasonal swings and an urgent, short-term need |
| Consider something else if | Businesses paid by invoice or bank transfer, or anyone who would qualify for a conventional term loan |
| Tax | The cost of a business-purpose advance is generally deductible. Confirm the treatment with your accountant. |
Advantages
- Repayments fall automatically in quiet trading periods
- Fast funding with minimal documentation
- No property security required
Trade-offs
- Annualised cost commonly 25–60% or higher
- Repaying early saves nothing — the total is fixed
- Daily deductions can strain cash flow if takings drop
How to apply for a merchant cash advance
- 01
Check the alternatives first
Your broker tests whether an unsecured loan, overdraft or invoice facility would fund the same need more cheaply.
- 02
Convert the quote
We restate every factor rate as an annualised cost and total dollars repaid so offers can be compared honestly.
- 03
Decide with the numbers in front of you
If the advance is still the right fit, you approve it knowing the full cost and the likely repayment period.
Documents lenders commonly ask for
- ID and ABN
- 6 months of merchant terminal statements
- 6 months of business bank statements
Lenders we compare for this
Prospa, Bizcap, Capify, Lumi, OnDeck and others on our panel. See the full panel.
Estimate your repayments
- Number of repayments
- 18
- Total interest (est.)
- $27,353
- Total repaid (est.)
- $102,353
This calculator provides an estimate only and does not account for fees, charges or the specific terms a lender may offer. It is not financial advice or an offer of finance.
Key terms
What is a merchant cash advance?
A merchant cash advance is a lump-sum payment to a business in exchange for an agreed share of its future card sales. Repayment happens automatically as a percentage of each day’s takings until a fixed total, set by a factor rate, has been repaid.
What is a factor rate?
A factor rate is a multiplier applied to the amount advanced to determine the total repayable — a 1.25 factor on $50,000 means repaying $62,500. It is not an interest rate, and because the balance reduces over the term, the equivalent annual percentage rate is substantially higher.
Is a merchant cash advance regulated credit?
Merchant cash advances provided for business purposes are not consumer credit under the National Credit Code. Many providers are signatories to the Australian Finance Industry Association’s Online Small Business Lenders Code, which requires disclosure of an annualised cost figure.