MCA vs Business Line of Credit vs SBA Loan: How to Choose

How Each One Works

Merchant cash advance (MCA): you receive a lump sum upfront and repay it through fixed daily, weekly, or monthly payments, priced with a factor rate (typically 1.15 to 1.49). Approval is based primarily on your monthly revenue and bank statement activity, not your credit score or collateral.

Business line of credit: you are approved for a maximum amount and draw only what you need, paying interest only on what you draw. It revolves — repay and the credit becomes available again. Approval weighs credit score, time in business, and revenue more heavily than an MCA.

SBA loan: a government-guaranteed term loan through an approved lender, with the lowest rates and longest terms in small business finance — and the slowest, most document-heavy process. Expect tax returns, financial statements, a business plan, and weeks to months of review.

Speed: Days vs Weeks vs Months

MCA: typically the fastest option available. At Workable Funding, offers often come back the same day and funds typically land within 48 to 72 hours of approval.

Line of credit: usually one to two weeks from application to an active line, sometimes faster with online lenders.

SBA loan: commonly 30 to 90 days from application to funding. If your need is urgent, the SBA timeline almost never works.

Cost: What You Actually Pay

SBA loans are the cheapest money by far — single-digit to low-double-digit APRs over terms of up to 10 years. Lines of credit sit in the middle, with APRs that vary widely by lender and borrower strength. MCAs are the most expensive of the three when expressed as an annualized rate.

The honest way to think about MCA cost: you are paying a premium for speed, accessibility, and the absence of collateral. For a business that qualifies for an SBA loan and can wait 60 days, the SBA loan is the better deal. For a business that needs $75,000 this week to cover payroll or buy inventory at a discount, the MCA's cost can be worth many times its price.

Qualification: Who Gets Approved

MCA: the most accessible. At Workable Funding the minimums are 6+ months in business, $15,000+ in monthly revenue, a business checking account, and a 500+ personal FICO — checked with a soft pull that does not affect your credit.

Line of credit: typically requires stronger credit (often 600–650+), at least a year in business, and consistent revenue. The best rates go to established businesses with clean credit.

SBA loan: the strictest. Strong credit, 2+ years in business, solid financials, and often collateral. Many profitable small businesses simply do not qualify, and startups almost never do.

When Each One Is the Right Choice

Choose an MCA when: you need capital in days, your credit is below 650, you have been declined by banks, or the opportunity cost of waiting (a missed inventory deal, a lost contract, missed payroll) exceeds the cost of the advance.

Choose a line of credit when: your need is recurring rather than one-time — covering regular cash flow gaps, seasonal swings, or ongoing working capital — and you have the credit and time to qualify. The revolving structure means you pay interest only when you use it.

Choose an SBA loan when: you are making a large, planned investment — buying real estate, acquiring a business, major expansion — you have strong credit and financials, and you can wait one to three months. Nothing else comes close on cost for big, patient money.

Can You Use More Than One?

Yes, and many businesses do. A common pattern: an MCA handles an immediate need while a line of credit or SBA application works through its longer process in the background. The key is making sure the combined payments fit your cash flow — any responsible funder will evaluate your existing obligations before making an offer.