Merchant cash advance vs business loan, which fits?

The honest comparison, drawn from current UK pricing and underwriting practice:

The six scenarios where we'll quote MCA confidently. MCA's edge is its underwriting, not raw speed:

• Your credit is imperfect. Recent CCJs, defaults, or thin personal file? Card data carries the application.
• You're a sole trader or partnership. MCA is available to sole traders as well as limited companies and LLPs. The lender prices off your card takings, not your legal structure.
• Your accounts are thin or non-existent. Newer business, only one filed year, or no filed accounts at all. 6 to 12 months of card data is enough to be assessed.
• The need is short-term and seasonal. Stock buy ahead of Q4, marketing for a peak window, fit-out during a quiet period.
• Revenue is variable and you want flex. Daily repayment % rises and falls with takings, a quiet month doesn't bite.
• You've been declined for a term loan. Different underwriting model. Card takings often open MCA where personal credit didn't qualify for a loan.

The six scenarios where we'll route to Funding Flow:

• You have clean credit and 2+ years of filed accounts. A term loan will price 3 to 5× cheaper. Use it.
• You need to repay over 2+ years. MCA doesn't fit. Term loan repayment profile matches long-term capital.
• Your funding need is a major capital project. Site acquisition, large refurbishment, business purchase, term loan instrument matches the use of funds.
• The total cost matters more than the daily repayment flex. If you qualify, a term loan typically prices materially lower over the term.
• You prefer fixed monthly repayments. Predictable cashflow planning. No daily repayment % to track.
• Your card volume is too low for a meaningful MCA. Below £10k/mo of card takings, MCA is the wrong product.

The two products aren't mutually exclusive. Three scenarios where stacking, or running them in sequence actually makes sense:

• Bridge plus base. Use a small MCA to bridge while a term loan completes for the bulk of the need. The MCA clears as the term loan lands.
• Capex plus working capital. Term loan funds the long-life asset (kit, fit-out). MCA funds the stock or marketing required to make the asset earn from day one.
• Now plus later. MCA today for an urgent seasonal need. Once the MCA is repaid, the trading track record helps qualify for a cheaper term loan in 12 months' time.

Three questions in order. Honest answers point at the right product:

1. How fast do I need the money? If the answer is “inside a week,” MCA is usually the only realistic option.
2. Will I qualify for a term loan? Clean credit, 2+ years filed accounts, no recent adverse events, yes. If yes, get a term loan quote first.
3. Does fixed monthly repayment work for my cashflow? Variable revenue and seasonal trading often suits MCA's flex. Predictable revenue suits a term loan's rigidity.

If you're unsure, run our calculator with realistic numbers. Or just send the application, we'll quote MCA and flag whether a term loan via Funding Flow looks cheaper for your specific case before you accept anything.