Cost — the gap is real

On a $100,000 advance, a term loan at 18% APR over 24 months totals about $19,500 in interest. The same $100,000 as an MCA at a 1.35 factor rate over 9 months totals $35,000 in cost — and you've paid the entire factor cost in less than half the term-loan period.

Plug your own numbers into the MCA Calculator to see the all-in effective APR on a specific offer before signing.

Speed — where MCAs earn their keep

MCAs underwrite primarily on 3–6 months of business bank statements, not on tax returns, financial statements, or personal credit deep-dives. That's why funding can clear in 1–3 days. A bank term loan needs personal and business returns, a current debt schedule, and often a business plan; SBA loans add another 30–60 days of SBA review.

When time-to-funding determines whether the deal happens at all — buying inventory ahead of a seasonal spike, covering payroll during a receivables gap, locking in a bulk-purchase discount — the speed premium can be worth the APR delta. When it doesn't, it isn't.

Qualification — credit cutoffs matter

Term loans (especially bank and SBA) have hard credit cutoffs. Below ~680 FICO, you're effectively shut out of bank pricing; below ~600, online term loans tighten or reprice substantially. MCAs underwrite to 500–550 FICO floors because they aren't pricing credit risk the same way — they're pricing future receivables.

If your credit is clean and your time-in-business is 2+ years, almost every alternative beats an MCA. If credit's strained, MCAs may be the only option until you can rebuild.

When an MCA actually makes sense

• You have an unavoidable cash need in the next 1–3 days and a term loan won't fund in time.
• The deal you're funding generates returns higher than the MCA's effective APR — typically only true for inventory plays with locked-in margin.
• You don't qualify for any other option (credit too low, time-in-business too short).
• You're bridging to a known receivable that will pay off the advance early without prepayment penalty (rare).

When an MCA is the wrong tool

• You're using it for operating losses with no clear path to revenue growth — the daily debits will deepen the hole.
• You already have one or more active MCAs and the new debit would push cumulative daily outflow above daily revenue. (See stacking.)
• You qualify for a term loan or line of credit and can wait the additional 2–6 weeks.