Revenue-based finance vs a merchant cash advance

2 min read

% of revenueRBF repayment

% of card salesMCA repayment

Factor rateCost to convert

How the two flex

A merchant cash advance (MCA) repays as a fixed percentage of your card takings, so it only fits card-led businesses. Revenue-based finance (RBF) repays as a percentage of your total revenue, however it arrives, which suits a wider range of businesses including those paid by invoice or bank transfer. Both share the appeal that you repay more in strong months and less in weak ones — but RBF is broader in scope.

Both are usually priced with a factor rate rather than an APR, and both can work out expensive once annualised. The flexibility is genuine; the cost of it often is not obvious. Read our revenue-based finance guide.

Watching the true cost

Because repayment is a share of income, neither product has a fixed end date, and the effective annualised cost depends on how fast you repay. A factor rate of, say, 1.15–1.3 can equate to a high APR when income is strong and repayment is quick. Always convert the factor rate to a comparable figure with the factor rate to APR calculator before you sign, and read APR vs factor rate to see why the headline understates the cost.

Which fits which business

	Merchant cash advance	Revenue-based finance
Repaid from	Card takings only	All revenue
Best for	Card-led retail, hospitality	Any revenue mix, incl. B2B/SaaS
Pricing	Factor rate	Factor rate
Cost, annualised	Often high	Often high

Choose MCA only if you are card-led; choose RBF if your income is mixed. But before either, compare against a transparent short-term loan — for many businesses it delivers similar working capital more cheaply.

The Credicorp view

If income genuinely swings hard, a flexible facility can be worth paying for — but check you are not overpaying for the flex. Credicorp lends to limited companies at a transparent, comparable rate with no factor-rate opacity and no personal guarantee. A Credicorp Flex line gives flexibility without the premium; a business loan gives certainty. Register to apply. Educational content, not financial advice.

Frequently asked questions

What is the difference between revenue-based finance and a merchant cash advance?

A merchant cash advance repays as a percentage of your card takings, so it only suits card-led businesses. Revenue-based finance repays as a percentage of your total revenue, whatever the source, so it fits a wider range including invoice-paid and subscription businesses. Both are usually priced with a factor rate.

Are these products expensive?

They can be. Both are typically priced with a factor rate rather than an APR, and because repayment is quick when income is strong, the annualised cost can be high. Always convert the factor rate to a comparable figure and weigh it against a transparent short-term loan before committing.

When is flexible repayment worth the cost?

When your income genuinely swings hard and a fixed instalment would strain you in weak months, the ability to repay less then can be worth a premium. But check the premium is real value, not opacity — compare the annualised cost against a revolving facility or short-term loan first.