Is an MCA a loan?

Quick Answer

Technically, no. An MCA (Merchant Cash Advance) is a purchase of future receivables, not a loan. The funder buys a percentage of your future credit card sales at a discount. This legal distinction means MCAs are not subject to most state usury laws and do not require lender licenses in most states.

Key Details

Legally: purchase of future receivables, not a loan
Not subject to most state usury laws
No lender license required in most states
No interest rate disclosed (factor rate instead)
State by state: NY, CA, VA require disclosures
Some states (CA, NY) regulate MCAs as loans

Answer by David Chen — Senior Business Funding Editor

12+ years in alternative lending. $200M+ underwritten.

Key Details

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