Both are advances on future revenue — but RBF is typically cheaper, longer-term, and favored by tech and eCommerce businesses. MCAs are faster and more widely accessible. Here's the real difference.
Merchant Cash Advances and Revenue-Based Financing are cousins, not twins. Both advance capital against future revenue. Both repay as a percentage of revenue. The key differences: RBF is typically structured with longer terms (12–36 months), lower effective cost, and is favored by tech companies, SaaS businesses, and eCommerce brands. MCAs are structured over shorter terms, are more widely accessible at lower revenue requirements, and fund faster.
| Factor | MCA | Revenue-Based Financing |
|---|---|---|
| Structure | Factor rate × advance | Revenue share % until cap repaid |
| Cost | Factor rate 1.10–1.50 | Typically 6–12% flat fee on advance |
| Effective APR | 20–60%+ | 15–35% (varies by timeline) |
| Repayment Term | Weeks to 18 months | 12–36 months typically |
| Min Revenue | $10K/month deposits | Often $50K–$100K+/month |
| Industries Favored | All businesses with deposits | SaaS, eCommerce, DTC brands |
| Repayment Mechanism | % of daily ACH deposits | % of revenue or fixed draw |
| Approval Speed | Same day – 72 hours | 2–7 days (data analysis required) |
| Equity Dilution | None | None |
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