What is an SBA Loan?
SBA loans are government-backed loans offered through approved lenders. They typically offer lower interest rates and longer repayment terms, but require more documentation and have a longer approval process.
What is a Merchant Cash Advance?
A merchant cash advance provides quick funding based on your future sales. You receive a lump sum and repay through a percentage of daily sales. MCAs are faster to obtain but typically have higher costs.
Key Differences
SBA loans have lower rates but take weeks to approve. MCAs fund in days but cost more. SBA loans require excellent credit and years in business. MCAs are more accessible to newer businesses or those with credit challenges.
When to Choose SBA
Consider SBA loans when you have strong credit, have been in business 2+ years, need larger amounts, can wait for approval, and want the lowest cost of capital.
When to Choose MCA
Consider MCAs when you need fast funding, have seasonal revenue, have been declined by banks, have credit challenges, or need flexible repayment that adjusts with sales.