MCA vs Term Loan vs Factoring
MCA vs term loan (and why the cheap-looking one is expensive)
The advance that can hit this afternoon looks cheaper than a term loan that takes underwriting. Then daily ACH starts. That is the file on daily ACH and MCA debt relief.
Related: How we work a file · MCA debt relief · Business debt relief
Side-by-side: payment, collateral, guarantee, refinance
Factor rate, UCC-1, and personal guarantee are defined in operator English on the MCA glossary. This page does not invent APR numbers.
| Merchant cash advance | Term loan | Factoring | |
|---|---|---|---|
| Payment shape | Daily or weekly ACH against the operating account. First claim on cash every banking day. | Installment, usually monthly. Sometimes weekly. A payment the cash-flow model can actually hold or it is not a take-out. | Against the invoices / debtors, not a daily sweep of all receipts in the same way. |
| Price | Factor rate on the funded amount. Not an APR, even when someone quotes one. | Interest / APR on a balance, usually monthly. We do not invent a comparison rate here. | A discount on invoices sold. You are selling receivables, not borrowing a term. |
| Collateral / UCC | UCC-1 on the business is common. Stacking adds filings. A blanket lien is a bank-deal killer. | May have a UCC, usually as part of a loan package that expects priority. | Often a UCC on the receivables. |
| Personal guarantee | Common. Often signed because the money had to hit that afternoon. | Common on small-business term loans, disclosed as a loan guarantee. | Varies. Still a commercial file, not consumer debt. |
| Refinance path | Take-out means the MCA is paid off and the daily debit dies. Another MCA is stacking, not refinance. | A real term take-out replaces the MCA with an installment the operating account can service. | Not a take-out of an MCA. Selling invoices is a different product. |
Payment shape: daily ACH vs installment
The expensive part of an MCA is the collection, not a slogan rate. Daily or weekly ACH takes first claim on the operating account. An installment sits on a calendar the cash-flow model can plan around. That is why refinance / take-out is about killing the daily debit, not about finding a prettier factor.
When a term take-out is real vs fantasy
A term take-out is real when a lender will actually pay off the MCA, the daily ACH stops, and the replacement installment is one the operating account can hold. UCC-1 filings and a stack are how that conversation dies before it starts. As of 1 June 2025, SBA 7(a) cannot refinance merchant cash advances. We do not sell that path.
A term take-out is fantasy when the offer is another merchant cash advance labeled consolidation, when nobody has looked at the UCC or the stack, or when the payment only works if next month is a miracle. Another MCA is not a term loan. Fake consolidation is a stack.
If you already have the MCA
The comparison is no longer theoretical. Work the file: how we work an MCA file. US owners. Consulting firm. Not a law firm. Not a settlement company.
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If you are comparing a new advance to a term loan you cannot get this afternoon, put both sets of numbers on the table (factor, debit, UCC, and guarantee) before the cheap-looking one hits.
