Definition
Merchant Cash Advance – A short-term financing product where a business receives an upfront lump sum in exchange for a fixed portion of its future card-payment receivables, repaid automatically as an agreed percentage of each day's processing volume rather than on a fixed installment schedule. Structured as a purchase of future receivables rather than a loan, which is how a payments company (e.g. Square Capital) can originate one without the state lending licenses a traditional loan would require — a classification the company itself flags as a regulatory risk if the product ever shifts toward fixed-term merchant loans. Found In: Notes to Financial Statements (receivables), Operating metrics disclosure, Risk Factors