Lines of Credit vs Merchant- What's the Difference?

Lines of Credit vs Merchant- What's the Difference?

Whatever loan product you're considering, it is important to have a solid grasp of what's involved, the terms you'll be looking at, and the way in which the funds are made available to you. In many cases, when you do need to get financing quickly, more quickly than say a traditional business loan from a bank, two good options are a business line of credit or a merchant cash advance (MCA/).

At First Union, we offer both financing programs, and we have seen both benefit our clients immensely—not to mention rapidly. We wanted to take a moment and look at the differences between the two, thereby giving you more information as you review potential financing choices.

Business Line of Credit

Essentially with a business line of credit, you get highly flexible access to cash when you need it. In applying for the line of credit you will determine the total amount you require. Upon being approved, you can then begin drawing money out. You don't necessarily have to take it all at once—rather as the need arises.

Credit lines with First Union can range from 5k all the way up to 1 million, so it is important that you spend some time thinking ahead—how much do you foresee needing. Interest is paid only on what you draw out. So you are not paying on the entire amount allotted, merely what you use, which makes this a very attractive financing option.

Merchant Cash Advance

With an MCA, different from a line of credit, you get a lump sum which then gets paid back via credit card transactions. This is generally done on a daily basis, so keep in mind that every day a percentage of your credit card transactions will be part of the withholding amount used to repay the loan. Such an amount can range from 5% to 40% depending on the terms established and the duration of the MCA.

If you tend to do a lot of credit card sales, then this might be a great option for you as usually no collateral is involved because it is based upon daily transactions, and you can get the cash fairly quickly—sometimes in as little as two days.

We at First Union make it our priority to sit down with clients and review the best options that suit their individual needs. There is no one-size-fits-all approach as each company is different and thus each has different goals, capabilities, and expectations. Call us today and let's get started together!

Becky: Hi! Let's find the best loan option for you

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First Union Lending LLC is a dually licensed Lender/Broker with its main offices located at 4900 Millenia Blvd First Floor Orlando, FL 32839. First Union Lending LLC and its ads are meant for continental United States, including Alaska and Hawaii small business owners. Business Loans offered by First Union Lending LLC have varying rates and terms that can range from 30 - 120 payments and all rates and terms are based on eligibility of the business and its owners. The actual terms are based on credit, business history, industry, amount and terms. As an example, a $5,000 loan paid over 5 years at 8% would have a total repayment of $6,082.92 over the life of the loan. We use the latest encryption to protect sensitive information transmitted online, as well as run our own secure server network to ensure your information is protected offline as well. California loans made pursuant to the California Financing Law, Division 9 (commencing with Section 22000) of the Finance Code. All such loans made through VBJ Consulting, LLC, a licensed finance lender/broker, California Financing Law License No. CFL#60DBO78163

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