Merchant Cash Advances Surpass Leasing As Goto Financing Option for Small Businesses
![2018 vs 2017](https://debanked.com/wp-content/uploads/2019/04/breakdown.jpg)
More small business applied for merchant cash advances in 2018 than they did leasing, factoring, or equity investments. That’s according to a recent Federal Reserve study of small businesses with less than 500 employees.
Nine percent of applicants applied for merchant cash advances in 2018 while only 3% applied for factoring. Leasing dropped year-over-year from 10% in 2017 to 8% in 2018.
On average, merchant cash advances were approved 85% of the time compared to business lines of credit (73%), business loans (67%), and SBA loans (52%). Six percent of all small businesses surveyed said they used merchant cash advances on a regular basis, versus 9% for leasing and 3% for factoring.
Unsurprisingly, small businesses overwhelmingly still sought loans or lines of credit. Of those surveyed that applied for any type of financing in 2018, 85% applied for a loan or line of credit and 28% applied for a credit card.
You can download the Federal Reserve’s complete report here.
Last modified: April 22, 2019