Merchant cash advance vs term loan vs line of credit: which one fits?
Three products, three different jobs. A merchant cash advance buys speed. A term loan buys the lowest cost and a long runway. A line of credit buys flexibility you only pay for when you use it. This guide lays out how each is priced, repaid and approved, and how to pick the one that matches the money problem in front of you.
By the Swyft Advance advisory team · Published November 3, 2026 · 9 minute read
The quick answer
- Need it this week
- Merchant cash advance. Decision in 24–48 hours, revenue-based approval, fixed dollar total.
- Have weeks, want the lowest cost
- Term loan from your bank, an SBA lender or an online lender. Monthly payments over years.
- Need keeps coming back
- Line of credit. Draw what you need, repay, draw again. Pay only on the drawn balance.
- Already carrying advances
- None of the three. Look at Reverse Consolidation first.
How the three products differ
Swyft Advance arranges merchant cash advances and lines of credit through its funding partners. We do not arrange term loans. They are in this guide because they are the right answer for some businesses, and you should know when that is you before you apply for anything.
| Merchant cash advance | Term loan | Line of credit | |
|---|---|---|---|
| What it is | A purchase of a portion of your future receivables. Not a loan. | A loan of a fixed amount, repaid on a set schedule to a maturity date. | A revolving loan. Draw up to a limit, repay, draw again. |
| How the cost is stated | A fixed dollar total you will remit, agreed up front. Does not change with time.* | An interest rate or APR on the balance, plus any origination fee. Paying off early usually saves interest. | Interest or a fee on the drawn balance only. Possible draw or maintenance fees.* |
| Repayment | Daily or weekly ACH remittance as a share of sales, typically 3–18 months.* | Monthly, sometimes weekly. One to ten years at a bank; months to a few years online. | Weekly or monthly on each draw, typically 6–24 months per draw.* |
| Speed to funds | Decision in 24–48 hours; funds 24–72 hours after final approval.* | Banks and SBA lenders: weeks to months. Online lenders: a few days. | Decision in 24–48 hours; draws same or next business day once open.* |
| Typical amounts | $10,000 to $1,000,000+, sized to monthly deposits.* | $25,000 to several million at banks and SBA lenders; smaller online. | $10,000 to $250,000+, set by revenue and credit.* |
| What approval rests on | Bank statements: deposits, balances, negative days, time in business. Credit is secondary. | Credit score, financial statements, tax returns, collateral, time in business. Usually a personal guarantee. | Revenue and credit together. Typically 600+, lower with strong deposits. |
| Time in business | 6+ months considered; 12+ opens more partners. | Usually 2+ years, with a profitable track record. | Usually 12+ months. |
| Best for | A short, specific, time-sensitive need where the capital earns more than it costs. | A large, planned investment that pays back over years. | Recurring or unpredictable gaps: payroll timing, inventory, slow receivables. |
| Watch for | Daily remittance strain, stacking, cost relative to a short use. | Closing time, collateral, covenants, prepayment terms. | Limit cuts, inactivity fees, the temptation to leave it drawn. |
The merchant cash advance: speed, priced in dollars.
A merchant cash advance is not a loan. A funding partner purchases a fixed dollar amount of your future receivables at a discount and deposits the purchase price in your account. You deliver the purchased amount through a daily or weekly ACH remittance that is sized to your sales. When the full amount has been delivered, the agreement ends. There is no interest rate, and the total you will remit is written into the offer in dollars before you sign.
Approval is built on the bank statements rather than the credit report. Underwriters read monthly deposits, average daily balance, negative days, time in business and any existing positions. That is why a business with a 580 score and strong deposits can be approved in a day, and why an advance is sized to revenue rather than to collateral. Most complete files get a decision in 24–48 hours and fund within 24–72 hours of final approval.*
The trade is cost and cadence. Over the same amount and time, an advance usually costs more than a loan, and the remittance leaves the account every banking day or every week rather than once a month. That makes it a strong fit for a short, specific use that earns money quickly, and a poor fit for a slow-paying investment or for covering losses.
- Fits: an inventory buy ahead of a season, a large order that needs materials up front, an emergency repair, a deposit on a lease, bridging a confirmed receivable.
- Fits less well: a build-out that will not produce revenue for a year, replacing lost revenue with no plan to restore it, paying off cheaper debt.
- Read first: the merchant cash advance page for amounts, remittance schedules and what every offer states.
- Advance amount
- The deposit to your account
- Total to remit
- Fixed in dollars on day one
- Remittance
- Daily or weekly amount, by ACH
- Term
- Estimated weeks or months to deliver
How to compare it to a loan: put the advance total next to the loan's total of payments over the time you would actually use the money, then weigh the difference against what waiting would cost you. The advance wins when the opportunity is real and the window is short.
See a funded example: the $75,000 restaurant advance on the case studies page.
The term loan: the lowest cost, if you can wait and qualify.
A term loan is the product most owners picture when they hear "business loan." You borrow a fixed amount, the lender states an interest rate, and you repay in equal installments, usually monthly, until the maturity date. Banks and credit unions write them, SBA-guaranteed lenders write them with longer terms and lower down payments, and online lenders write shorter, faster versions.
For a planned investment that pays back over years, nothing beats it on cost. A kitchen expansion, a second location, a fleet addition or an acquisition is exactly what a five- or ten-year term loan is for. The monthly payment is small relative to the amount, it does not move with your sales, and paying it down early usually saves interest.
The price of that cost advantage is time and qualification. A bank or SBA file typically takes weeks to months, asks for two or more years of tax returns and financial statements, wants a personal score in the high 600s or better, often takes collateral and nearly always takes a personal guarantee. If the opportunity will not wait, or the file will not pass, the cheaper product is not actually available to you, and the comparison is between the products that are.
- Fits: expansions, acquisitions, real estate, large equipment, refinancing more expensive debt into one long payment.
- Fits less well: a need with a deadline inside the lender's closing time, a business under two years old, a file with recent negative days or tax issues.
- Where to go: your existing bank first, then an SBA-preferred lender. Swyft Advance does not arrange term loans. If a term loan is the right answer, your advisor will tell you so.
Three kinds of term loan
| Source | Typical shape | Time to close |
|---|---|---|
| Bank or credit union | 1–10 years, monthly, collateral and guarantee, strongest credit | Several weeks |
| SBA-guaranteed lender | Up to 10 years for working capital and 25 for real estate, lower down payment, heavy paperwork | One to three months |
| Online term lender | 6–36 months, weekly or monthly, lighter paperwork, higher cost than a bank | A few days |
Shapes are typical of the market as of November 2026 and vary by lender. Swyft Advance does not offer term loans and makes no representation about any lender's terms.
The line of credit: flexibility you pay for only when you use it.
A business line of credit is a revolving loan from a lender. You are approved for a limit, you draw what you need when you need it, you repay each draw on its own schedule, and the amount you repaid becomes available again. You pay interest or a fee on the drawn balance only. An open line that you are not using costs you little or nothing, depending on the lender's maintenance fees.
That shape fits a need that keeps coming back in different sizes: covering payroll the week before a large receivable lands, buying inventory in several small lots, carrying a slow-paying customer. It is the product to have in place before the gap appears, because a line opened under pressure is opened on worse terms, if at all.
Approval sits between the other two. Lenders look at revenue and credit together, typically want 600 or better and at least a year in business, and set the limit from both. Decisions arrive in 24–48 hours and, once the line is open, draws arrive the same or next business day.* The thing to watch is discipline. A line that stays fully drawn for a year has become an expensive term loan, and lenders review and sometimes cut limits when deposits fall.
- Fits: uneven cash flow, seasonal inventory, receivables that pay in 30–90 days, a safety net you want to have before you need it.
- Fits less well: one large purchase you will repay over years, a business under a year old, an owner who will leave it drawn.
- Read first: the line of credit page for limits, draw terms and what lenders look for.
- Line of credit
- Draw $20,000, repay over the draw term, draw again next month
- Merchant cash advance
- $20,000 lump sum, fixed total, daily or weekly remittance until delivered
Pick the line when the $20,000 need will recur, when you can qualify on credit as well as revenue, and when you have a few days to get it open before the first draw.
Pick the advance when it is one-time, when the file is stronger on deposits than on credit, or when a line is not available to you yet. See the $100,000 distributor line for a funded example.
Four situations and what usually fits.
Start from the problem, not the product
Owners who choose badly almost always chose the product first. Name the amount, the deadline, how long the money will be out and what it will earn, and the answer usually falls out.
Credit is holding you back? The bad credit funding guide covers what each credit band typically qualifies for across all four of our products.
Five mistakes we see when owners compare these products.
- Comparing a rate to a dollar total. A term loan states a rate; an advance states a total. Convert the loan to its total of payments over the time you would actually use the money, then compare dollars to dollars alongside the time each takes to fund.
- Ignoring cadence. A daily remittance and a monthly payment feel very different in the account even when the totals are close. Look at the weekly outflow against your average weekly deposits before you sign anything.
- Taking the fast product for the slow project. An advance that funds a two-year build-out will be fully remitted long before the build-out earns a dollar. Match the term to the payback.
- Stacking instead of restructuring. A second and third advance on top of the first is the most common way a healthy business gets into trouble. If you are there, consolidate before you add. Our guide on getting out of an MCA stack walks through every route.
- Leaving a line drawn. A line of credit is cheap when it revolves and expensive when it does not. If you cannot pay it down between draws, you needed a term loan.
Questions to ask about any offer
- What is the total I will pay or remit, in dollars, if I keep this the full term?
- What leaves my account, how often, and starting when?
- What happens if sales drop: is there a reconciliation, a modification, a default?
- Is there a discount or penalty for paying early?
- What fees are charged beyond the stated cost: origination, ACH, draw, maintenance?
- Is there a personal guarantee, a confession of judgment or a lien?
- Does my state require a written disclosure before I sign? See our disclosures page.
Questions about choosing between them
Is a merchant cash advance a loan?
No. A merchant cash advance is a purchase of a portion of your future receivables. The funding partner pays you a purchase price today and you deliver a fixed dollar amount of future revenue through daily or weekly remittances. There is no interest rate, no maturity date in the loan sense, and the total you remit is stated in dollars when you sign. A term loan and a line of credit are loans.
Which is cheapest: an MCA, a term loan or a line of credit?
Over the same amount and time, a bank term loan usually costs the least, a line of credit sits in the middle, and a merchant cash advance usually costs the most. You pay for speed and for a revenue-based approval. The right comparison is what the capital earns against what it costs in dollars, not the cost alone. An advance that funds a profitable order this week can beat a cheaper loan that closes after the order is gone.
Can I get a term loan with bad credit?
Bank and SBA term loans typically want a personal score in the high 600s or better, two or more years in business and a clean history. Online term lenders go lower but shorten the term and raise the cost. Below the mid 600s, a merchant cash advance or a revenue-based line is usually the realistic path, because the decision rests on bank statements rather than the score.
Should I take a merchant cash advance to pay off a term loan?
Rarely. A term loan is almost always the cheaper money, so replacing it with an advance raises your cost and shortens your schedule. The exceptions are a loan in default that is about to be called, or a one-time gap where the advance is small and short relative to the loan. Talk to the term lender about a modification first.
Can I have a line of credit and a merchant cash advance at the same time?
Often, yes. Many businesses carry a line for recurring needs and take an advance for a one-off opportunity. Disclose every open balance when you apply for either. Underwriters see the remittances in your statements, and an undisclosed position slows the file or kills it. If you already carry two or more advances, Reverse Consolidation is usually a better next step than a third position.
Not sure which one? Ask an advisor.
One application, offers from the partners that fit your file, every one laid out in plain dollars. If a term loan is your better answer, we will say so.