Merchant Cash Advance Guide
A merchant cash advance gives businesses a lump sum upfront and requires them to pay a fixed percentage of each processor payout, until the advance and fixed fee are paid.
This guide covers everything you need to know to evaluate and launch a merchant cash advance program on your platform — from eligibility and coverage to lifecycle, offer structure, and legal requirements.
Value for Small Businesses
- Fast, automated approvals. Pre-qualified offers based on payment processing data, with final decisions in minutes.
- Sales-based underwriting. No credit pull or credit history required. Financing decisions are based on real-time sales data and financial behavior.
- Same-day funding. Accept a final offer and receive funds via same-day ACH.
- Flexible repayment. Repay as a percentage of daily sales, automatically calculated based on processor payouts. Payments rise and fall with revenue.
Value for Platforms
- Customer retention. Deepen your platform's value by giving small businesses access to the working capital they need — without leaving your product.
- New revenue stream. Earn a share of the capital fee when a customer converts, without increasing your own operating costs.
- Fully managed. Unit handles the heavy lifting for you, including underwriting, servicing, support, and collections. Choose from a no code or low code implementation path.
Eligibility & Coverage
Unit's embedded merchant cash advance is available to a broad range of small businesses that process payments through your platform.
Two requirements apply at the platform level:
- the majority of the customer's business revenue should be processed through your platform, and
- your platform must have programmatic access to the customer's payment processing data.
Before launching a merchant cash advance program, you'll want to assess how much of your customer base is likely to qualify.
Business Eligibility
To apply for a merchant cash advance, a business should meet the following baseline criteria:
- Entity type: Commercial business — corporations, LLCs, partnerships, or sole proprietors may apply
- U.S. operating address: Primary business address in the United States
- Time in business: Minimum 1 year of operating history
- Business bank account: Must have a business checking account in the name of the business
- Revenue: Minimum $125,000 in annual revenue
- Payment processing history: Minimum 6 months of payment processing history
- Applicant: The primary applicant must be an owner or control person of the business, at least 18 years old, and a U.S. citizen
Industry and Geographic Eligibility
The merchant cash advance is available across most industries and U.S. states, with some exceptions. Please contact Unit for more information on specific industry or geographic coverage.
Coverage Testing
Unit can help you evaluate how many of your customers are prequalified for merchant cash advance offers. To do so, we'll need some basic anonymized data — at a minimum, six months of sales data per customer.
The criteria above represent minimum eligibility requirements. Businesses that meet these thresholds will proceed to underwriting, where a more comprehensive review of payment processing history and financial condition is conducted. Additional factors assessed during underwriting may affect whether a business ultimately qualifies for a merchant cash advance offer.
Merchant Cash Advance Lifecycle
Your customers move through the entire merchant cash advance lifecycle — applying, accepting, and managing their advance — through the embedded components in your platform UI or a Unit-hosted experience on your domain, depending on your implementation path.
| Stage | Description |
|---|---|
| Prequalified Offers | Your platform provides Unit with a list of prospects to evaluate. Unit continuously assesses eligibility using payment processing data and refreshes prequalified offers weekly. Prequalified offers invite customers to apply by presenting a personalized funding range — with fee and payment rate terms that update as they toggle between their eligible minimum and maximum amounts. See Prequalified Offers for more detail. |
| Application | Customers complete a white-labeled application form to apply for a merchant cash advance. The application asks for basic business information and allows the applicant to digitally link one or more bank accounts, instead of providing paperwork for underwriting. Most decisions are available within minutes of submission. |
| Underwriting | A machine learning model assesses payment processing history, revenue consistency, and account health. No credit pull or personal guarantee required. |
| Final Offer | Approved applicants receive a set of final offers to choose from. To accept a final offer, the customer digitally reviews and signs a merchant cash advance agreement and relevant disclosures. Upon acceptance, funds are sent to the merchant's linked bank account via same-day ACH. |
| Servicing | After accepting a final offer, customers see a branded dashboard where they can view and manage their financing. They can view their payment progress, monitor transaction history, and make payments in the dashboard. |
| Payment | A fixed percentage of processor payouts is collected automatically until the total payment amount is paid in full. Payments flex with revenue. Payment methods include ACH Debit (Unit monitors processor payouts and debits the customer's linked account) and Split Settlement (Unit takes payment directly from a processor payout and sends the remainder to the customer). Unit works directly with customers who fail to make payments. |
| Support | Unit handles customer support. Customers can reach out to Unit directly via a chat widget within the capital dashboard. |
Prequalified Offers
Prequalified offers let you surface capital offers to eligible customers before they apply — reducing friction and increasing conversion.
How It Works
To generate prequalified offers, your platform provides Unit with a list of prospects. A prospect represents a customer on your platform that you'd like Unit to evaluate for a merchant cash advance. Each prospect includes your platform's internal user ID, the customer's processor ID, and optional additional information that helps Unit assess eligibility and tailor prequalified offers.
Once prospects are submitted, Unit continuously evaluates them against eligibility and underwriting criteria using their payment processing data. You can update your prospects (e.g., add or remove customers) at any time. Prequalified offers are refreshed on a weekly basis, so customers who didn't initially qualify may receive an offer as their processing history grows.
Surfacing Offers to Customers
Prequalified offers can be delivered to customers in two ways:
- In-platform. Surface offers directly within your product experience – example, in a dashboard banner or a dedicated capital tab – using the Prequalified Offer Component.
- Email / Unit-hosted experience. Unit sends branded email notifications to customers on your behalf, with a link to view their prequalified offers via a Unit-hosted experience.
See the No Code Implementation and Embedded Components Implementation sections for details on configuring each approach.
Offer Structure
There are two types of merchant cash advance offers: prequalified offers and final offers. Prequalified offers are generated based on a prospect's payment processing history and presented to prospects with an invitation to apply for a merchant cash advance. Offers are finalized based on underwriting of payment processing history, bank account health, and application data. Final offers are presented to applicants after their application is approved. Terms are memorialized in the merchant cash advance agreement that the applicant must digitally sign to accept their offer.
Each offer is composed of the following terms. Actual values are determined during underwriting and will vary by applicant.
| Term | Description |
|---|---|
| Financing amount | The lump sum amount credited to the customer's bank account upfront |
| Fixed fee | A one-time fee is collected over time as part of ongoing payments, not upfront. |
| Total payment amount | The financing amount plus the fixed fee — the total amount the customer will pay |
| Payment rate | The fixed percentage of each processor payout collected as payment until the total payment amount is paid in full |
Security & Legal Requirements
Nature of the Transaction
A merchant cash advance is not a loan. In an MCA, Unit purchases the business's future payment processing receipts — accounts receivable — at a discount. Those future receipts become Unit's property upon funding. As a result, a merchant cash advance does not carry a personal guarantee requirement, and repayment obligations are tied to the business's sales activity rather than a fixed payment schedule.
UCC Filing
Unit may elect to file a UCC-1 financing statement on some merchant cash advances. This filing is a security interest only against the future receivables that Unit has purchased — not against the business's other assets or the business owner personally. This is distinct from the blanket UCC-1 filings associated with traditional secured loans, which are secured against all business assets.