Comparison Guide
Merchant Cash Advance vs Bank Loan
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 has significantly higher approval rates than banks.
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
High
62%
Credit Requirements
Minimal
Good-Excellent
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 are a newer business (under 2 years)
You want repayments that flex with sales (seasonal business)
You do not want fixed monthly payments
When to Choose Bank Loan
You have excellent credit (700+ score)
You do not 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 are 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)
Benefits:
- ✓ Get money in 24-48 hours
- ✓ High approval rates
- ✓ Flexible daily repayments
Bank Loan (8% APR)
Interest rate:8% APR
Total repayment:£32,420
Cost:£2,420 (8%)
Monthly payment:£2,702 (fixed)
Benefits:
- ✓ Saves £2,080 total
- ✓ Lowest cost option
- ✓ Predictable payments
Verdict
Bank loan saves £2,080 but MCA is 10x faster and 50% easier to get approved.
Compare Both Options for YOUR Business
Get information and next steps based on your business situation, credit profile, and funding needs. CapExpand does not provide regulated financial advice.
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