As a small business owner, there may come a time when you need some extra money to achieve specific goals. Whether that’s hiring new employees, getting a new location, increasing your marketing efforts, or purchasing additional inventory, a little extra help can go a long way.

Small business loans are one of the most well-known methods of financing. However, these loans can be difficult for small businesses to obtain. Fortunately, you have options. In this article, we’ll take a look at small business loans versus a merchant cash advance.

Small Business Loan

A small business loan is a form of financing that provides you with a lump sum. You make monthly payments for a set term and pay interest on the amount you borrow. Lenders require a substantial amount of paperwork, and you must meet specific requirements.


Lenders want to be assured that you’re able to repay what you borrow. They request information such as bank statements, your business plan, financial projections, your credit history, and more.

Repaying a Small Business Loan

Small business loans have a set term, which the lender determines. Terms can range from a few months to a few years. You make monthly payments, which include principal and interest, until the end of your term. You can pay off the balance early, but you might want to make sure there are no prepayment penalties.

Merchant Cash Advance

A merchant cash advance isn’t actually a loan. It’s an advance on your future card sales. You repay the money plus a fee, which lenders base on the amount you receive. It’s much easier to qualify for a merchant cash advance, but it can be more expensive.


Instead of basing your qualification on your credit score, most lenders offering merchant cash advances care more about your debit and credit card sales. Many will look at your credit history, but that number isn’t as important. Most lenders also don’t require collateral.

Repaying a Merchant Cash Advance

Instead of making monthly payments, you repay your merchant cash advance using the funds from your card sales. Most lenders require you to pay a fixed percentage, and you make your payments daily or weekly. The more you make, the more you pay and vice versa.

Explore All of Your Options

When it comes to financing, small business owners like yourself do have options. If you don’t qualify for a conventional bank loan, a merchant cash advance is one solution you have at your fingertips. Before you start applying, though, be sure to investigate all of your options so that you find what makes the most sense for you.