How to Start a Merchant Cash Advance Business in 4 Simple Steps

If you want the chance to earn incredibly high profits (upwards of 100% APRs in some cases) while offering a much needed funding option for small businesses that need cash fast, then starting a merchant cash advance business may be the perfect business for you.

This article will provide a step-by step guide to starting your merchant cash advance business. This guide consists of the following 4 steps (you can skip ahead to any one of them by clicking on the appropriate link below).

But before we dive into the guide, we’ll cover some key questions around merchant cash advance businesses, including what they are, how much money they can make, and the pros and cons of owning such a business. Knowing the answers to these questions is critical if you want to have a complete picture of what you are getting into.

It’s a lot to cover so let’s get into it! 

This post may contain affiliate links. If you click on a link and complete a transaction, I may make a small commission at no extra cost to you. 

The information contained in this post is for informational purposes only.  It is not a recommendation to buy or invest, and it is not financial, investment, legal, or tax advice.  You should seek the advice of a qualified professional before making any investment or other decisions relating to the topics covered by this article.

What is a Merchant Cash Advance Business?

A merchant cash advance (MCA) business lends money to small businesses and gets paid back with interest (but in the MCA world it’s not called interest, it’s called the factor rate) by taking a piece of the merchant’s future credit card sales. The MCA business will continue to take a portion of the credit card sales until it has been fully repaid the agreed upon amount. So if the loan is for $10,000 and the factor is 1.4, then the total amount that needs to be repaid is $14,000.

Technically, an MCA is not considered a loan (it’s a purchase of future receivables). But that’s a mouthful, so for purposes of this article, I am going to call it a loan.

Because an MCA is not a loan, MCA businesses are not regulated like lenders. However, that may change in the future. This article goes into some detail on litigation that is occurring around MCA businesses and the continuing scrutiny that these types of businesses are facing.

Note: There are other types of businesses that can profit from MCAs, including MCA brokers (they basically bring together small businesses that need the loans with the lenders that provide them), and affiliate marketers who promote MCA lenders on their websites or other platforms (these online specialists perform a similar matchmaking function, but don’t actually call any small businesses to make the hard sell).

How Much Money Can an MCA Business Make?

As the owner of an MCA business you can charge your small business borrowers a rate that typically ranges from about 40% to 350% (including all fees, etc.), depending on the amount of the loan, how long it takes to repay the loan and the size of the future credit card sales. Source.

That is a huge potential return on your capital!

Of course, it goes without saying that, like any business, you are not guaranteed a profit, so your results may vary.

And we can’t forget about expenses. You will have a variety of expenses associated with running your business, such as marketing costs, administrative costs, etc., that will eat into your profits. That being said, there are MCA businesses that are highly profitable after paying all of their expenses, so it is doable if you run your business correctly.

You want to pay special attention to your underwriting (which is just the process of analyzing the strength of the small business) and make sure it is on point so you don’t lend money to the wrong business.

What Are the Pros and Cons of a MCA Business?

Like with any business, there are pros and cons to an MCA business.

Pros of a Merchant Cash Advance Business Include:

  • Potentially High Profits
  • You Are Your Own Boss
  • Not Federally Regulated (Yet), But Subject to the Uniform Commercial Code

The Cons of an Merchant Cash Advance Business Include:

  • Significant capital needed to start (or at least access to a large amount of money that you can use to lend out)
  • Could be subject to lawsuits if you engage in misleading or deceptive practices. Source
  • Could lose what you lend out if merchants go out of business

Of course, this is just a sampling of the pros and cons of an MCA business and there are many more. But these are some important ones to keep in mind when evaluating whether this type of business is right for you.

Ok, now that we have the introductory stuff out of the way, let’s get into the step-by-step guide to starting your merchant cash advance business.

Step 1: Establish Your Merchant Cash Advance Business 

The first thing you need to do is set up your merchant cash advance business.  This includes selecting your name and logo, establishing your website, and setting up your business entity.  

Name and Logo 

The first thing you want to do is select a name and logo that you like. 

Having trouble figuring out a name?  Try Shopify’s business name generator.  It’s free.   

As for a logo, I have zero artistic ability and limited tech skills, so I like a simple and easy to use option.   

One solid option is to go on Fiverr and hire someone to create your logo.  There are tons of people who do this, and I have seen pricing as low as $5.  For that price, you can probably try a bunch of folks and pick the logo that suits you best.   

Or you can go with Looka.  They are an AI-powered platform that will provide you a professional looking logo at reasonable prices.  You can choose from hundreds of logo designs (based on parameters and preferences you select) before settling on one you like.  You can also customize to your heart’s content.  Check them out here.

Note: You want to make sure your name and logo are original to you and are not going to infringe someone else’s intellectual property. If you are unsure, you can check the USPTO’s trademark search tool as a starting point.

Set Up Your Merchant Cash Advance Website (For Free) 

When it comes to your website, it does not have to be incredibly fancy or cost a lot of money to set up. There are a lot of resources available to help you with this.  

In fact, Google allows you to build your first business website for free.  

It is also important to get your merchant cash advance business on Google. You can do this by listing it on Google My Business. This way, people who are searching for merchant cash advances in your area can find you. 

If you want to learn more about how to do this, check out this tutorial from Google

Set Up Your Business Entity 

If your business is going to be a corporation, LLC, or some other business entity, you should establish that as well.  Setting up a business entity can give you a range of benefits, including liability protection. You can hire a lawyer to help you, or you can use many of the online resources that can help you set up your business entity. 

I like Northwest because they can get you up and running quickly and easily.  They are also one of the most affordable options that I was able to find that still offered great customer service ($39 as of the date of this article).

According to their website, they are the only national registered agent service that lets you use their office address so you don’t have to use your own. That’s a killer privacy advantage.

Definitely worth checking out.

You should consult with your accountant and lawyer before taking this step, so you understand the tax and legal consequences of setting up this type of organization for your business. 

Step 2: Create a Business Plan 

A business plan is essentially a roadmap for your business.  

It organizes your thoughts relating to your business into an actionable plan. Some things to include in your business plan are budgeting (as mentioned, you will need a significant amount of money to get started), identifying your target market and competition, pricing strategy, and marketing strategy (this is critical – if you don’t have a steady flow of borrowers, your business is dead).

Note: If starting costs are an issue, you can pivot and start making money in this industry by establishing an MCA brokerage (which won’t require nearly as much money because you won’t be funding the loans) or becoming an affiliate marketer for MCA companies (which will be more affordable for the same reason).

But going back on topic – don’t stress too much about getting your business plan perfect. I would use it more as an organizational tool at this point. 

Another benefit of having a business plan is that it can help you raise money from banks and investors (given the high potential starting costs, you may need to get some financing). These folks will want to see a professional-looking business plan as part of their lending or investing process.   

Don’t know how to get started? The Small Business Administration has a great tool to help you write your business plan.

Step 3: Develop a Marketing Plan 

As I mentioned earlier, having a solid marketing plan is essential to the success of your business. Fortunately, there are a number of marketing channels you can use.

For online marketing, you can do the following: 

  • Set up a Google My Business, so that people looking for merchant cash advance services can find you. You want to encourage people to leave good reviews there for you if they like your business. Research has found a strong relationship between the number of online reviews a business and the revenue that it generates.
  • Get a great website that draws traffic to your business (you can hire an SEO expert to help you do this) 
  • Get on Yelp for business and let your customers find you.  They are an extremely well-known brand, and many people look there when searching for local businesses.  Want to learn more?  Check them out below: 
  • In addition to advertising on Yelp, you can buy online ads from other online and social media outlets (Facebook, etc.). This can be a terrific way to target businesses that may be looking for loans.

Of course, you can also work with MCA brokers, who will bring leads to you. You will have to pay them a commission, but using brokers is a common practice to generate business.

There are also Merchant Cash Advance businesses that offer commissions to affiliate marketers who bring them deals. Go Kapital, Shield Funding and Fast Upfront are some of the MCA businesses that do this. You could do something similar and harness the power of affiliate marketing.

Ultimately, you want to experiment with various marketing strategies – you may be surprised at what works best. 

Step 4:  Get the Right Licenses, Permits and Insurance 

This step is about getting your legal and risk issues squared away. 


First, you should get insurance for your merchant cash advance business. You may want to look into the following: 

  • General liability coverage (protects against third party claims for property damage and injury) 
  • Professional Liability Insurance (for claims based on your professional negligence)
  • Workers compensation insurance for your employees (unnecessary if you are operating alone) 

There may be other types of insurance that you may want to consider, so consult with a qualified insurance specialist to make sure you are appropriately covered.


In addition to getting the right insurance coverages, you will need to check with your state and local municipalities to see what type of permits and licenses you need to operate your business.  A good place to start is your local county clerk’s office.

In many cases, you will need to get a general business license (which is usually not too expensive or difficult to obtain), but there may be other more specific permits or licenses required, depending on where you live and the scope of activities you plan to engage in.  

If you need help navigating all of this, your county clerk’s office is the best place to start, but if you run into a wall, you can always hire a qualified lawyer to help guide you through the process. 

Speaking of lawyers, you will need a lawyer to help draw up all of the legal contracts, etc. that you will need to have your borrowers sign, so it’s best to engage a qualified lawyer early on so they can help guide you through all of the legalities required for this business.


So, there you have it: 4 simple steps to start your merchant cash advance business.  Now this isn’t the easiest business to start, but it can yield some impressive rewards if you get it right.