What is the difference between a Merchant Cash Advance and a Collateral Loan?

An MCA is an advance on future sales based on revenue, while a collateral loan uses high-value assets as security, offering quicker cash and no revenue impact.

Why is a collateral loan better for some businesses?

Collateral loans are faster, do not require credit checks, and do not impact business revenue, making them ideal for businesses with high-value assets.

What assets can be used as collateral?

Luxury watches, jewelry, and other high-value items are accepted as collateral at Qollateral.

Are collateral loans confidential?

Yes, collateral loans at Qollateral are 100% confidential, with no credit checks or financial reviews required.

Collateral Loans vs. Merchant Cash Advances: Choosing the Best Option for Your Business

Does your business need a cash infusion? If so, you might be wondering whether a Merchant Cash Advance vs Collateral Loan is the better option for your specific needs. At Qollateral, we provide an unbiased comparison of these two funding solutions, helping you make an informed decision that best supports your business’s unique situation.

What is an MCA?

To start, let’s define a Merchant Cash Advance (MCA). An MCA is not a loan but rather an advance on your future sales. It’s based on your business’s average monthly credit and debit card transactions. The payment schedule for an MCA is flexible, with a fixed percentage of revenue going to the lender each month, rather than a traditional repayment schedule with interest. While obtaining an MCA may be easier and quicker, it typically proves more expensive over time, positioning it as a short-term solution less cost-effective than alternatives like a collateral loan.

How Does a Collateral Loan Compare to an MCA?

We are sincere in saying that many businesses who opt for an MCA would be better off with a collateral loan, provided they have enough value in acceptable assets to put up as collateral. Let’s take a look at the facts to understand why.

A collateral loan is typically much easier to secure than an Merchant Cash Advance. Book an appointment, bring your asset, sign a contract, and receive your cash payment quickly.
You’ll receive your funds faster with a collateral loan. At Qollateral, we provide an instantaneous cash or bank wire transfer payment. No MCA can come close to a same-day payment.
Your revenue remains untouched. With an MCA, your business will consistently lose a percentage of revenue as repayment of the advance continues. With a collateral loan, you don’t have any payments to make. You simply pick up your asset when your business is financially ready to do so.
A collateral loan is anonymous. Nobody is up in your literal business, reviewing your financials for a collateral loan. Your loan amount is based uniquely on your asset’s value, not your ability to repay. To secure an MCA, the lender will assess your financials and determine the advance and repayment percentages based on those details.

These are the 4 key reasons you would want to consider a collateral loan instead of an Merchant Cash Advance. As you can see, the collateral loan has some significant advantages.

Is an MCA Ever Better Than a Collateral Loan?

Although many businesses may benefit more from a collateral loan than an MCA, two specific scenarios may make a Merchant Cash Advance the better option:

You do not have assets of great enough value to meet your business’s financial needs. You can check out our list of acceptable collateral assets here. It’s not an exhaustive list, so we encourage you to reach out if you have any questions.
If you’re uncertain about repaying your loan or reclaiming your asset, and you’re unwilling to risk losing it, a collateral loan may not be the right choice. Your business may lack sufficient financial history to predict outcomes or be uncertain about the impact of decisions. If you’re unsure about risking your asset, an alternative financing option may be a better choice.

We hope this helps you choose the right option for your business, and if you choose a collateral loan, consider Qollateral, NYC’s Best Pawn Shop.

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