What Is a Merchant Cash Advance?
A merchant cash advance is not a traditional loan but rather an advance on a company’s projected revenue. Businesses receive funds upfront and agree to repay through a percentage of daily or weekly sales, often collected via ACH debits.
In small business lending, this option is common for merchants with strong card sales or recurring revenue but who may not qualify for traditional bank loans.
Brokers use MCAs to give clients fast liquidity, while funders use them to generate returns based on repayment tied directly to revenue performance.
How Does a Merchant Cash Advance Work?
Merchant cash advances operate as revenue-based financing.
- Advance issued: A business receives an upfront lump sum from the funder.
- Repayment method: The funder collects repayments through a share of sales, often daily or weekly.
- Factor rate: Repayment is calculated using a fixed factor rate, not an interest rate, which determines the total amount owed.
- Completion: Repayments continue until the agreed amount is fully paid back.
In Heron, MCA workflows are automated end-to-end.
- Submission intake: Brokers forward MCA packets by email, portal, or API.
- Scrubbing: Bank statements are parsed for cash-flow metrics such as average daily balance, NSF frequency, and debt obligations.
- Eligibility checks: Appetite rules confirm whether the deal meets funder criteria for MCA programs.
- CRM write-back: Clean fields like revenue, repayment capacity, and flags are written into CRM records.
- Next action: Deals are routed to underwriting or directly to ready-to-fund status when conditions are satisfied.
This automation allows brokers and funders to scale MCA deal flow without adding manual staff.
Why Is a Merchant Cash Advance Important?
For brokers and funders, merchant cash advance is important because it is a core product in small business financing. It offers fast funding when traditional loans are inaccessible, but it requires high-volume intake and careful risk assessment.
Heron improves MCA workflows by reducing the time from inbox to CRM, automating scrubbing of bank statements, and providing underwriting-ready data. This helps brokers handle more submissions, improves decision accuracy, and supports funders in offering fast turnarounds.
Common Use Cases
Merchant cash advance is widely applied in small business financing.
- Brokers submitting MCA applications with bank statements, IDs, and supporting docs.
- Funders assessing eligibility based on cash flow, overdraft frequency, and existing debt.
- Automating decision email parsing to move MCA deals faster into CRM workflows.
- Scaling MCA pipelines by replacing offshore packet prep with automation.
- Reducing manual errors in cash-flow calculations tied to MCA underwriting.
FAQs About Merchant Cash Advance
How does Heron support merchant cash advance workflows?
Heron automates submission intake, scrubbing of bank statements, and structured write-back of key MCA fields, making underwriting-ready packets available in minutes.
Why is a merchant cash advance valuable for MCA brokers and funders?
It is a core financing product in their portfolios. Faster automation reduces cost per submission and improves the broker experience by speeding up approvals.
What outputs should teams expect from MCA automation in Heron?
Teams gain clean CRM records with parsed financials, flagged risk signals, and faster turnaround times, allowing them to close more MCA deals.