Business Funding: 10 Questions to Ask Your MCA Provider

Running a business often means balancing opportunities with challenges. Maybe you want to stock up ahead of a busy season, invest in new equipment or smooth out a dip in cash flow. Whatever the case, having quick access to business funding can make all the difference.

One option many retail and hospitality businesses turn to is a merchant cash advance (MCA). Unlike traditional bank loans, MCAs can provide funding fast, with remittance tied to your daily sales. But while the flexibility is appealing, not all providers operate the same way.

Some MCAs come with hidden fees, rigid remittance terms or confusing fine print that can catch business owners off guard. That’s why it’s essential to ask the right questions before signing any agreement. By doing so, you can protect your cash flow, avoid unnecessary costs and choose a funding partner who has your best interests at heart.

In this guide, we’ll walk through:

• What is a merchant cash advance?
• The 10 key questions every business owner should ask a potential provider
• How to know if an MCA is right for your business
• Why partner with Lightspeed Capital?

What is a merchant cash advance?

At its simplest, an MCA is an advance of capital based on your future sales. Here’s how it works:

• A provider gives you a lump sum of cash upfront.
• You remit it through a fixed percentage of your daily or weekly sales (known as the “holdback rate”).
• Remittances flex with your revenue. When sales are high, you pay back more; when sales dip, you pay back less.

Why businesses choose MCAs

• Speed: Funds are often available in days, not weeks.
• Flexibility: Payments rise and fall with your sales.
• Accessibility: Approval is typically based on sales volume, not credit score.

But here’s the catch: MCAs aren’t all created equal. Some providers charge hidden fees or impose rigid remittance rules that don’t match the natural ups and downs of running a business. That’s why asking the right questions is critical.

10 questions to ask every MCA provider

These are the questions every business owner should ask before moving forward with an MCA—along with why they matter.

1. What happens if my sales drop during the remittance period?

Seasonality is part of retail and hospitality. If sales slow down, you don’t want to be stuck with fixed repayments. A good MCA should flex with your daily revenue, easing pressure during quieter times. For example, with Lightspeed Capital, remittances automatically adjust to your card sales, so you’re never left scrambling to cover a set payment when business is slow.

2. Can I qualify for an MCA with bad credit?

Traditional loans often hinge on credit scores, but MCAs usually focus on sales performance. If your business consistently generates revenue, you may still qualify even if your credit isn’t perfect. This makes MCAs a strong option for businesses with limited credit history or past challenges—especially when fast approval is crucial.

3. How exactly does remittance work, and what percentage of sales will go toward them?

Every MCA provider uses a holdback rate—a percentage of your daily or weekly sales that goes toward remittance. The rate affects your cash flow, so you need clarity upfront. Ask your provider for concrete examples based on your actual sales figures. If they can’t (or won’t) provide this transparency, it’s a red flag.

4. What are the total costs of the MCA? Are there hidden fees?

MCAs don’t use traditional interest rates. Instead, they use a factor rate (e.g., 1.2 or 1.3). This number determines how much you’ll pay in total, regardless of how quickly you pay it off.

Some providers also add origination fees, admin fees or even “processing charges.” These can inflate your costs significantly.

With Lightspeed Capital, there are no hidden fees, you’ll always see a clear, upfront breakdown of costs.

5. How long does it take to get business funding?

One of the biggest draws of an MCA is speed. Many providers approve within 24–48 hours, with funds arriving just a few days later. If your provider can’t move quickly, you may miss out on time-sensitive opportunities like stocking up for a busy season or hiring staff ahead of a rush.

6. Is there a fixed term, or does remittance adjust to my sales?

Some providers offer fixed terms, which can feel more predictable—but they also increase risk during slow months. Others tie remittance directly to sales, giving you breathing room when revenue dips. Ask your provider which model they use and whether you’ll have flexibility when you need it.

7. What happens if I want to pay off the MCA early?

Some providers impose penalties for paying early, while others may offer small discounts. If early repayment is important to you, clarify the rules before signing.

Remember: flexibility here can save you money and stress in the long run.

8. How do I know if my business qualifies for an MCA?

Most providers assess:

• Average monthly sales volume.
• Consistency of card transactions.
• Time in business.

Knowing these requirements upfront can help you avoid wasted time applying for funding you may not qualify for. With Lightspeed Capital, eligibility is straightforward for existing Lightspeed POS customers—your sales history is already connected, making the process faster and simpler.

9. How much funding can I access, and how is it calculated?

Funding is usually tied to a multiple of your monthly sales. For instance, a business making $50,000 per month might qualify for an advance between $30,000 and $100,000.

The key is transparency: your provider should clearly explain how they calculate the amount, not just throw numbers at you.

10. How is customer support handled?

Support shouldn’t end once the money hits your account. Reliable customer support is essential if you run into issues or simply need clarity on your balance.

Look for providers that:

• Offer dedicated account managers.
• Provide clear communication channels.
• Respond quickly to inquiries.

With Lightspeed Capital, you’ll have access to dedicated support from a team that understands retail and hospitality businesses.

How to know if an MCA is the right business funding for you

MCAs can be powerful—but they’re not always the best fit. Here’s when they make sense, and when you may want to explore other options.

When MCAs work well:

• Seasonal businesses: Payments flex with busy and slow months.
• Growth opportunities: Expanding inventory or opening a new location can’t always wait for bank loans.
• Steady card sales: Businesses with reliable transaction volume benefit most from sales-based repayment.

When MCAs may not be ideal:

• Long-term investments: Projects like major renovations may need lower-cost financing.
• Highly unpredictable revenue: Irregular sales could make remittance difficult.
• Tight profit margins: Since MCAs often cost more than loans, slim margins can get squeezed.

Why partner with Lightspeed Capital?

Choosing a business funding partner isn’t just about getting cash, it’s about finding one that supports your success. That’s where Lightspeed Capital stands out.

• Transparent terms: No hidden fees, no surprises. You’ll always know the true cost upfront.
• Remittances that flex with sales: Payments adjust based on your daily card revenue.
• Seamless access: If you already use Lightspeed POS, approval is fast and straightforward.
• Trusted by thousands: Retailers and hospitality businesses across the world rely on Lightspeed to fund growth.

Final thoughts

Whether you’re stocking up for a busy season, hiring new staff or covering a short-term cash flow gap, finding the right business funding partner matters. Transparent terms and flexible repayments aren’t just nice to have, they’re what keep your cash flow steady and your business moving forward.

Asking the right questions can save you from costly mistakes and ensure your funding truly supports your business. An MCA can be a smart, flexible way to access capital—if you work with the right provider.

Editor’s note: Nothing in this blog post should be construed as advice of any kind. Any legal, financial or tax-related content is provided for informational purposes only and is not a substitute for obtaining advice from a qualified legal or accounting professional. Where available, we’ve included primary sources. While we work hard to publish accurate content, we cannot be held responsible for any actions or omissions based on that content. Lightspeed does not undertake to complete further verifications or keep this blog post updated over time.