One in 10 Small Businesses Trapped by High APRs of MCAs

Eight percent of small businesses applying for funding choose merchant cash advances, but the annual percentage rate (APR) on a merchant cash advance (MCA) can reach 300 percent

Leading invoice funding company Viva Capital says more than 160,000 small businesses sought funding through merchant cash advances last year, a decision that could prove costly and hinder their growth prospects going forward. Viva's latest report, "What is a Merchant Cash Advance (And Why You Might Want to Avoid It)," provides a cost breakdown and alternatives and is now live on

Viva pulls data from the latest Small Business Credit Survey, which finds that eight percent of small businesses applying for financing choose merchant cash advances. The figure held steady year-on-year after making a five-percent jump two years ago. 

"There's a clear link between the surge in MCA applications and denials for loans and lines of credit," explains Armando Armendariz, Director of Business Development and Partner of Viva Capital. "Approval rates for traditional funding methods plummeted by 15 percent in the same time span."

Armendariz notes that just 68 percent of those applying for loans and lines of credit are approved, and more than half of all small businesses don't receive all the funding they need. Merchant cash advances can seem like a simple solution due to the easy approval process, he says. 

"When a business owner hears that they'll only lose a small percentage of sales going forward in exchange, it sounds straightforward and affordable," Armendariz continues. "But, if they do the math, they'll see they're paying up to 300 percent APR. Other funding options top out at around eight percent. MCAs are considerably more expensive and can damage growth potential going forward."

Armendariz encourages businesses to examine the true cost of their funding options and find alternatives if their intended choices aren't a good fit for their growth objectives. Invoice factoring, for example, also has an easy qualification process and accelerates payments on B2B invoices instead.

Those interested in learning more about invoice factoring and other MCA alternatives are encouraged to request a complimentary consultation at


Founded in 1999, Viva helps B2B businesses of all types accelerate cash flow through specialized funding solutions like factoring, accounts receivable financing, and asset-based lending. Our simple qualification process makes it easy for small and mid-sized companies to get vital funding despite lack of credit or time in business. Additional information is available at

Armando Armendariz

Source: Viva Capital Funding