Merchant Cash Advance vs Bank Loan: Which is Better?
Quick Answer: Choose MCA if you need money quickly (24-48 hours), have poor credit, or want flexible repayments. Choose bank loan if you have perfect credit, don't need money urgently, and want the lowest cost. MCA costs more but approves 90% vs banks' 62%.
Rates checked: August 2026
Head-to-Head Comparison
| Feature | Merchant Cash Advance | Bank Loan |
|---|---|---|
| Approval Speed | 24 hours ✓ | 4-8 weeks |
| Funding Speed | 24-48 hours ✓ | 6-12 weeks |
| Approval Rate | 90% ✓ | 62% |
| Credit Requirements | Minimal ✓ | Good-Excellent needed |
| Repayment Flexibility | Flexes with revenue ✓ | Fixed monthly |
| Cost | 15-35% effective APR | 5-10% APR ✓ |
| Collateral | None required ✓ | Often required |
When to Choose MCA
- You need money in 24-48 hours (emergency, opportunity)
- You have poor credit or CCJs
- Banks have rejected you
- You're a newer business (under 2 years)
- You want repayments that flex with sales (seasonal business)
- You don't want fixed monthly payments
When to Choose Bank Loan
- You have excellent credit (700+ score)
- You don't need money urgently (can wait 6-8 weeks)
- You want the lowest possible cost
- You need a very large amount (£500k+)
- You have collateral to offer
- You're an established business (5+ years)
Cost Comparison Example
Borrowing £30,000 over 12 months:
Merchant Cash Advance:
- Factor rate: 1.15
- Total repayment: £34,500
- Cost: £4,500 (15%)
- Daily repayment: £96 (varies with sales)
Bank Loan (8% APR):
- Interest rate: 8% APR
- Total repayment: £32,420
- Cost: £2,420 (8%)
- Monthly payment: £2,702 (fixed)
Verdict: Bank loan saves £2,080 but MCA is 10x faster and 50% easier to get approved.
Compare both routes for your business
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