Merchant cash advance vs revenue-based finance: what is the difference?
The two terms are used almost interchangeably in the market, and they are not the same thing. The difference decides how the money leaves your account, and that matters more day to day than the headline rate does.
Merchant cash advance
An MCA is repaid as a percentage of your card takings. A quiet week means a smaller payment; a strong week means a larger one. The repayment is collected through the card terminal or payment processor before the money reaches you.
That structure suits businesses where nearly all income arrives by card — a café, a salon, a bar. It suits a business that invoices on thirty-day terms considerably less, because there may be very little card volume to collect from.
Revenue-based finance
Revenue-based finance is repaid on a fixed schedule from your business account, drawn from all revenue rather than card takings specifically. The payment is the same each week, and it does not depend on how you were paid.
That is how our advances work: a fixed weekly payment over 20 or 26 weeks, regardless of whether your customers pay by card, transfer or invoice.
The trade-off, stated honestly
A percentage-of-card model flexes with a bad week, which is genuinely useful if your trade is seasonal or weather-dependent. The price of that flexibility is that you do not know when the advance will finish.
A fixed weekly schedule gives you a known end date and a known total, which makes it far easier to plan against. The price is that a quiet week still asks for the same payment. Neither structure is better in the abstract — they are better for different businesses.
If your income is heavily card-based and genuinely volatile, an MCA may fit you better than we do, and that is a reasonable conclusion to reach on this page.
What is the same
Both are usually priced with a factor rate rather than interest, which means the total is fixed at the start and repaying early does not reduce it. Both are commercial funding to incorporated businesses, and both sit outside FCA consumer-credit regulation.
Questions, answered plainly
Is a merchant cash advance the same as revenue-based finance?
No. An MCA is repaid as a percentage of card takings, so payments rise and fall with card volume. Revenue-based finance is repaid on a fixed schedule from all revenue. Solvo's advances are the fixed-schedule kind — a set weekly payment over 20 or 26 weeks.
Which is better for a business that invoices its customers?
Usually revenue-based finance. An MCA collects from card takings, so a business paid mainly by bank transfer or on invoice terms may have little card volume to collect from.
Do I need a card terminal to apply to Solvo?
No. Our repayments are collected on a fixed weekly schedule from your business account, so how your customers pay you does not affect eligibility.
Are both priced with factor rates?
Typically yes. Both fix the total repayable at the outset rather than accruing interest on a reducing balance, which means early settlement does not lower the total.
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