A merchant cash advance (MCA) is typically structured as a lump sum payment to a business in exchange for an agreed-upon percentage or fixed dollar amount of future business deposits. The term is now commonly used to describe a variety of small business funding or financing options characterized typically by short payment terms (generally less than 36 months) and small regular payments (paid each business day, once a week, twice a month or monthly, depending on the company's cash flow consistency) as opposed to the large monthly payments and longer payment terms associated with traditional bank loan financing. The term "merchant cash advance" may be used to describe purchases of future credit card sales receivables or short-term business loans.
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