Business Funding Guide
Merchant Cash Advance for Contractors
April 7, 2026
Contractors deal with a specific cash flow problem: big jobs require materials and labor upfront, but payment arrives weeks or months later. A Merchant Cash Advance solves that gap, $15K–$500K funded in 24–48 hours, based on your monthly revenue, not your credit score.
Here is exactly how it works and whether it makes sense for your contracting business.
Quick Summary
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- MCA solves contractors' core problem: materials and labor cost upfront, payment arrives later
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- Funds in 24-48 hours, $15K-$500K based on monthly revenue, not credit score
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- Requirements: $15,000+/month in business revenue, 6+ months operating, business bank account
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- Repayment is automatic daily percentage of deposits, slows during slow months
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- No collateral required, your equipment and jobs are not pledged
How Merchant Cash Advances Work for Contractors
A Merchant Cash Advance is not a loan. You receive a lump sum upfront in exchange for a percentage of your future daily business deposits. There is no fixed monthly payment, repayment comes directly from your business bank account as a daily percentage (called the holdback rate).
How the math works:
- You receive $50,000 upfront
- Factor rate: 1.3 (meaning you repay $65,000 total)
- Holdback rate: 15% of daily deposits
- If you deposit $5,000/day, you repay $750/day
- If revenue slows, daily repayment slows with it
This flexibility is why MCA works well for contractors, project-based cash flow is unpredictable, and a payment that moves with your revenue is easier to manage than a fixed monthly loan.
Who Qualifies: MCA Requirements for Contractors
MCA approval is based on your business revenue, not your credit score.
Requirements:
- $15,000+/month in business bank deposits (averaged over 3 months)
- 6+ months in business
- Business bank account (personal accounts do not qualify)
- No minimum credit score
- No collateral required
If your contracting business is pulling in $15K+ per month and has been operating for at least 6 months, you can likely qualify, regardless of whether you have perfect credit or significant business history.
What Contractors Use MCA Funding For
The most common uses for contractor MCA funding:
Materials and inventory. Buying lumber, roofing, HVAC equipment, or electrical supplies before a large job without waiting for the deposit check to clear.
Equipment purchases or repairs. A broken excavator or truck can kill a job. MCA gives you same-week capital to fix or replace equipment.
Payroll during slow periods. Keeping your crew paid between jobs or during seasonal slowdowns. Losing a skilled crew because cash flow dried up is expensive.
Bidding on larger jobs. Sometimes a bigger contract requires bonding, materials, or subcontractors before the first draw. MCA bridges the gap.
Expanding capacity. Taking on a second job simultaneously, adding a crew, or purchasing a vehicle to grow revenue.
MCA Cost: What to Expect
MCA uses factor rates instead of interest rates. A factor rate is a multiplier applied to your advance amount.
Example:
- Advance: $30,000
- Factor rate: 1.25
- Total repayment: $37,500
- Cost: $7,500
Factor rates typically range from 1.1 to 1.5 depending on your revenue, time in business, and industry. The holdback rate (daily repayment percentage) is typically 10–20% of daily deposits.
MCA is not cheap compared to a bank loan. It is a high-cost, fast-access product. Use it when speed and access matter more than rate, not as long-term financing.
How to Apply
The application process is fast:
- 3 months of business bank statements, the main thing underwriters review
- Basic business info, business name, EIN, time in business
- Voided check from your business bank account
Approval typically comes within 24 hours. Funding deposits within 24–48 hours of approval.
Is an MCA Right for Your Contracting Business?
Good fit if:
- You need capital in 48 hours or less
- You have strong monthly revenue ($15K+) but limited credit history
- You have a specific short-term need (materials, equipment, payroll)
- You plan to repay quickly, factor rate costs less the faster you repay
Not a good fit if:
- You want long-term financing at the lowest possible rate
- Your monthly revenue is below $15K
- You're in the very early stages (under 6 months in business)
If you have a 720+ personal credit score and no business history, an unsecured business line of credit may be a better option, lower cost, revolving access, 0% intro period.
Frequently Asked Questions
Can a contractor get a merchant cash advance with bad credit?
Yes. MCA approval is based primarily on monthly revenue, not credit score. Contractors generating $15,000+ per month with 6+ months in business can qualify with 500+ credit.
How fast can contractors get funded?
Most approvals happen within 24-48 hours of a complete application. You need 3 months of business bank statements, basic business info, and a government-issued ID.
Does a merchant cash advance require equipment as collateral?
No. MCA is unsecured, no assets are pledged. Approval is based on revenue history.
What if my contracting business has seasonal revenue?
MCA repayment is tied to daily revenue, slower seasons mean smaller automatic payments. This makes it more manageable than a fixed monthly loan payment during off-seasons.
Ready to See If You Qualify?
Answer a few questions about your contracting business, no hard credit pull, takes under 5 minutes.