Compare finance types
Merchant cash advance vs Secured loan: which is right for your business?
The main difference between a merchant cash advance and a secured business loan is how they are secured and repaid: a merchant cash advance suits cafés, restaurants, salons, bars and retailers with steady card sales that need funds fast for stock, a fit-out, equipment or a busy season, while a secured business loan suits businesses with property or unencumbered assets borrowing larger amounts over longer terms.
Merchant cash advance vs Secured loan at a glance
| Merchant cash advance | Secured business loan | |
|---|---|---|
| What it is | A merchant cash advance is a lump sum advanced against your future card sales, repaid automatically as a small share of each day’s card takings until an agreed total is repaid. Approval is fast, no property security is needed, and repayments rise and fall with your trade. | A secured business loan is a lump-sum business loan backed by an asset you pledge — usually residential or commercial property, but sometimes equipment or a general security agreement over the business. Security lowers the lender’s risk, so rates are lower and terms longer than unsecured lending. |
| Amount | $5,000 – $300,000 | $50,000 – $5,000,000 |
| Term | 3–18 months | 12–180 months |
| Indicative rate | 25% – 60% p.a. | 6.8% – 13.5% p.a. |
| Rate type | Factor rate | Fixed or variable |
| Security | Unsecured (guarantee may apply) | Secured by property |
| Repayments | A set percentage of daily card settlements | Monthly, principal and interest or interest-only for a set period |
| Typical speed | 24–48 hours | 2–6 weeks including valuation |
| Best for | Cafés, restaurants, salons, bars and retailers with steady card sales that need funds fast for stock, a fit-out, equipment or a busy season | Businesses with property or unencumbered assets borrowing larger amounts over longer terms |
| Consider the other if | Businesses paid mostly by invoice or bank transfer, where invoice finance or a line of credit usually fits better | Urgent funding needed this week, or amounts too small to justify valuation costs |
| Tax | The cost of a business-purpose advance is generally deductible. Confirm the treatment with your accountant. | Interest on business-purpose borrowing is generally deductible. Establishment and valuation costs may be deductible over time. Confirm with your accountant. |
Rates are indicative, change without notice and depend on the lender, product, asset, term and your credit profile at the time of application. They are not an offer of finance. Comparison rates, where shown, are true only for the example given.
When to choose a merchant cash advance
A merchant cash advance is usually the better fit for cafés, restaurants, salons, bars and retailers with steady card sales that need funds fast for stock, a fit-out, equipment or a busy season. Its main advantages are repayments fall automatically in quiet trading periods, funding in 24–48 hours with minimal documentation, no property security required. Consider the alternative if businesses paid mostly by invoice or bank transfer, where invoice finance or a line of credit usually fits better.
When to choose a secured business loan
A secured business loan is usually the better fit for businesses with property or unencumbered assets borrowing larger amounts over longer terms. Its main advantages are materially lower rates than unsecured lending, larger amounts and terms up to 15 years, interest-only periods available on many facilities. Consider the alternative if urgent funding needed this week, or amounts too small to justify valuation costs.
Merchant cash advance
A merchant cash advance is a lump sum advanced against your future card sales, repaid automatically as a small share of each day’s card takings until an agreed total is repaid. Approval is fast, no property security is needed, and repayments rise and fall with your trade.
Secured business loan
A secured business loan is a lump-sum business loan backed by an asset you pledge — usually residential or commercial property, but sometimes equipment or a general security agreement over the business. Security lowers the lender’s risk, so rates are lower and terms longer than unsecured lending.