Running a food truck is an exciting entrepreneurial journey, full of creativity, community engagement, and culinary innovation.

But as many food truck owners quickly learn, managing cash flow and accessing quick capital can be challenging.

Whether it’s buying a new truck, upgrading equipment, or expanding to new locations, having reliable funding options is critical.

One increasingly popular financing option for food truck owners is the Merchant Cash Advance (MCA). But what exactly is a merchant cash advance?

How does it work? And what should food truck owners know about the rates, companies offering MCAs, and application requirements?

This article will break down everything you need to know about merchant cash advances and how they can fuel your food truck’s growth.

What Is a Merchant Cash Advance (MCA)?

A Merchant Cash Advance is a financing option where a lender provides you a lump sum of cash upfront, which you repay over time by sharing a portion of your daily credit card and debit card sales.

Unlike traditional loans, MCAs are based more on your business’s sales volume than your credit score or collateral.

Think of it as an advance on future sales—you get money now, and the lender takes a percentage of your daily card receipts until the advance is fully repaid, plus fees.

How Does an MCA Work for Food Truck Owners?

For food truck owners, MCAs can be especially attractive because:

• Fast access to funds: You can get approved and funded in as little as 24–48 hours, which is perfect for urgent expenses.
• Flexible repayment: Payments adjust with your daily sales. On slow days, you pay less; on busy days, more.
• No collateral required: You don’t have to put up your truck or other assets as collateral.
• Credit-friendly: Approval depends more on your sales history than credit scores, making MCAs accessible even if your credit isn’t perfect.

Here’s a simplified step-by-step of how MCAs work:

1. Application: You apply online or over the phone, providing your business details and sales history.
2. Approval & Funding: The lender reviews your daily credit card sales (often with access to your payment processor), then offers an advance amount based on your average sales.
3. Receiving Funds: Once approved, the lump sum is deposited into your business account.
4. Repayment: Each day, a fixed percentage of your credit card sales is automatically deducted and sent to the lender until the total repayment amount (advance plus fees) is paid off.

Who Should Consider an MCA?

While MCAs are convenient and quick, they are not the best fit for every food truck owner. Here’s who might benefit most:

• Food trucks with steady, predictable credit card sales.
• Owners who need funds quickly for equipment, truck repairs, or seasonal inventory.
• Businesses with limited access to traditional bank loans.
• Food trucks comfortable with daily automatic payments.

However, MCAs can be expensive compared to other financing options, so they should be used strategically.

Companies Offering MCAs to Food Truck Owners

Many MCA providers serve small businesses, including food trucks. Here are some top companies to consider:

1. Rapid Finance

Rapid Finance is known for providing quick access to capital with flexible repayment options tailored to your business’s cash flow.

They specifically cater to businesses that have been operating for at least six months, ensuring you have a track record of sales.

Their process is straightforward, allowing food truck owners to apply online and receive funding often within 24 to 48 hours.

With competitive factor rates and personalized service, Rapid Finance supports food trucks needing urgent cash for growth, repairs, or inventory.

• Rates: Factor rates typically range from 1.1 to 1.5.
• Application: Simple online application; funding within 24–48 hours.
• Requirements: Minimum $10,000 monthly credit card sales; 6+ months in business.

2. Fundbox

Fundbox offers both merchant cash advances and lines of credit, known for their clear, upfront pricing without hidden fees.

They provide quick online applications and fast decisions, making it easier for food truck owners to access funds.

Fundbox is ideal for businesses with consistent revenue that need flexible financing options.

• Rates: Daily fees average around 4.66%, depending on term length.
• Application: Online application, decision within minutes.
• Requirements: Minimum $10,000 in monthly revenue; 3+ months business history.

3. Kabbage (Now part of American Express)

Fundbox offers both merchant cash advances and lines of credit, known for their clear, upfront pricing without hidden fees.

They provide quick online applications and fast decisions, making it easier for food truck owners to access funds.

Fundbox is ideal for businesses with consistent revenue that need flexible financing options.

• Rates: Interest rates range from 1.5% to 10% monthly.
• Application: Online, automated approval based on sales data.
• Requirements: Minimum $50,000 in annual revenue.

4. Square Capital

Square Capital offers merchant cash advances (MCAs) specifically designed for businesses utilizing Square as their payment processor.

This integration allows food truck owners to access funding seamlessly, leveraging their existing sales data.

• Rates: Factor rates vary between 1.1 to 1.5.
• Application: Automated offers based on Square sales history.
• Requirements: Active Square account with at least 3 months of sales history.

Understanding MCA Rates and Fees

Unlike traditional loans that charge an interest rate, MCAs use a factor rate to calculate repayment. Here’s what that means:

• A factor rate typically ranges from 1.1 to 1.5. For example, if you borrow $10,000 at a factor rate of 1.3, you will repay $13,000 total.
• The total repayment amount includes the original advance plus fees.
• Since repayments are tied to a percentage of daily sales, the time to repay depends on your sales volume. Faster repayment means less overall interest paid.

Important: Factor rates translate to very high Annual Percentage Rates (APR), often 30% to 200%, so MCAs should be considered short-term solutions for urgent cash needs.

Application Process for Food Truck Owners

The application process for an MCA is designed to be quick and convenient:

Step 1: Gather Your Financial Information

Typical information needed includes:

• Business bank account details.
• Recent credit card processing statements.
• Proof of business ownership (EIN, business license).
• Time in business and monthly sales figures.

Step 2: Choose a Lender and Apply Online

Most merchant cash advance providers streamline the application process with easy online forms that typically take 15 to 30 minutes to complete.

You’ll be asked to share key business information, recent sales history, and your bank account details, which are essential for both receiving the funds and setting up automatic daily repayments.

Step 3: Lender Review and Offer

When you apply for a merchant cash advance, the lender typically reviews your daily credit card sales by accessing your payment processor data, such as Square or Stripe.

This allows them to quickly assess your business’s revenue flow and determine how much funding you qualify for.

Because this process is automated and data-driven, approval decisions often happen within just a few hours, enabling rapid access to capital.

Step 4: Review Offer and Terms

You’ll receive an offer specifying:

• The advance amount.
• The factor rate.
• The daily percentage of sales to be deducted.
• The estimated repayment timeline.

Step 5: Accept and Receive Funds

Once you accept the offer, funds are typically deposited into your business bank account within 1-2 business days.

Requirements to Qualify for an MCA

Though MCAs are more accessible than traditional loans, they still require some basic qualifications:

• Minimum business operating history: Usually 3 to 6 months.
• Minimum monthly credit card sales: Often between $5,000 and $10,000.
• Active merchant account: A credit card processor or payment platform (e.g., Square, Stripe).
• Business bank account: For funds disbursement and repayment.
• Proof of ownership and legal compliance: Business licenses, EIN, or other registration documents.

Merchant Cash Advances can be a valuable financing tool for food truck owners who need quick access to capital without the hurdles of traditional loans.

They offer flexibility, speed, and accessibility, but it’s essential to understand their higher costs and carefully evaluate your ability to repay.

If you’re ready to grow your food truck business and have a steady stream of credit card sales, MCAs might be the right option to help you hit the road faster and stronger.