Merchant Cash Advance for Businesses With No Revenue Yet: What to Know

Can You Get a Merchant Cash Advance With No Revenue?

A merchant cash advance (MCA) gives your business a lump-sum payment in exchange for a share of future sales. Many small businesses use MCAs for quick access to funds, especially if they have strong debit or credit card sales.

However, merchant cash advances are not available to businesses with zero revenue. Nearly all MCA providers require proof of actual sales before they consider your application. You’ll need to show several months of bank statements or merchant processor reports. According to Stripe, an MCA is typically not offered to businesses without a history of sales or deposits (Stripe).

For example, a brand-new business with no sales won’t qualify for a $50,000 merchant cash advance. Lenders want evidence that you can repay the advance through daily or weekly payments from your sales. If your bank account shows no incoming funds, your application will be declined.

Why MCAs Require Revenue—and What Providers Look For

Lenders want to see that your business is active and generating sales. They look for three main things: a business bank account, a record of card or bank sales, and the ability to make regular payments from those sales. Most MCA companies—including Merchant Growth and OnDeck—ask for at least three months of statements showing consistent deposits and withdrawals.

This is because merchant cash advances are repaid from a set percentage of your daily or weekly sales. Without revenue, there’s nothing to remit. Even if your business just opened, most providers will suggest other funding sources until you’ve built up a sales history. Only in rare cases will a pre-revenue business get a merchant cash advance, and that’s usually if you can provide a strong personal guarantee or collateral. More often, early-stage businesses are directed to startup loans, government-backed programs, or grants (Stripe).

Regulation also plays a role. In 2024, Canada reduced the general criminal interest rate to 35% APR (Justice Canada). While most business loans and advances are exempt if they meet certain criteria, this change has made lenders more careful about who qualifies and at what cost.

Here’s a real-world scenario: A Toronto coffee shop with $20,000 per month in card sales could receive a $25,000 merchant cash advance from a provider like OnDeck, repaid at 15% of daily sales. A business with no sales, regardless of business plan strength, is not eligible for the same advance.

Alternatives to MCAs for Pre-Revenue and Startup Businesses

If your business hasn’t made any sales yet, other funding options are available for startups and pre-revenue companies:

1. Canada Small Business Financing Program (CSBFP):
This federal program helps businesses with gross revenue up to $10 million access loans through banks and credit unions. The government shares the risk with your lender, making it easier to qualify even if you’re new (CSBFP). For instance, a Halifax startup could secure $100,000 for equipment with a CSBFP loan before earning revenue.

2. Futurpreneur Canada:
Entrepreneurs aged 18–39 can access up to $75,000 for startups, along with mentorship and business support (Futurpreneur). Many first-time business owners use this to launch their ideas.

3. BDC Startup Loans:
The Business Development Bank of Canada (BDC) offers flexible loans for new companies. These loans are tailored for early-stage businesses that don’t yet qualify for merchant cash advances (BDC).

Compared to merchant cash advances, these options take longer—often 2–6 weeks for approval—but they work for businesses with little or no revenue. MCAs are quick, with funding in as little as 48 hours for eligible companies, but require proof of sales. Government programs and startup loans focus on your business plan, credit, and collateral instead.

Looking for more funding options? Some lenders offer flexible choices for startups and early-stage businesses. You can also explore small business loans and small business administration loan qualifications for additional details.

Common Mistakes and Risks When Seeking Early-Stage Funding

Many new business owners misunderstand how merchant cash advances work or overlook the true cost. Here are some common pitfalls:

• Ignoring Cash Flow:
  Some businesses fail to stress-test their cash flow before taking on new debt. If sales drop, can you still cover payroll and rent? Stripe recommends checking your numbers carefully before applying.

• Not Reviewing Costs:
  Merchant cash advances can be expensive. Always review the total repayment amount, all fees, the daily remittance percentage, and the estimated APR-equivalent. For example, a $20,000 advance could cost $26,000 to repay over 8 months—much higher than a standard loan.

• Skipping the Fine Print:
  Legal counsel should review your merchant cash advance contract. Watch for default clauses, personal guarantees, and “stacking” (taking multiple advances at once). These can threaten your business if you aren’t careful.

For a full breakdown of risks and rules, see our merchant cash advance canada guide.

Steps to Take Before Applying for Any Business Funding

Before applying for funding—whether a merchant cash advance or another product—follow these steps:

1. Assess Your Cash Flow:
   Estimate how much you need and confirm you can handle repayment during slow months.
2. Compare Funding Options:
   Review merchant cash advance and small business loans pages to find options that fit your stage and needs.
3. Understand Eligibility:
   Most merchant cash advances require a sales history. If you’re pre-revenue, focus on startup loans or grants.
4. Prepare Your Documentation:
   Have your business plan, bank statements, and financial projections ready.

Curious about your eligibility? Checking your options takes about 2 minutes with GrowthX Capital.

Merchant Cash Advance FAQs for Startups and Pre-Revenue Businesses

Can a business with no revenue get a merchant cash advance?
No. Most providers require a sales history and bank deposits before approving a merchant cash advance (Stripe).

What are the alternatives to MCAs for startups?
Government-backed loans like CSBFP, Futurpreneur Canada, and BDC startup loans are better suited for pre-revenue businesses.

How do merchant cash advances compare to government-backed loans?
Merchant cash advances are faster but require sales. Government-backed loans take longer but are available to startups without revenue.

What are the risks of merchant cash advances for new businesses?
High costs, daily remittances, and strict contract terms. Always review the agreement and seek legal advice.

How does MCA regulation affect startups in Canada?
Recent changes like the 35% APR cap have made lenders more selective. Most startups will not be eligible for merchant cash advances until they have proven revenue.

Ready to see your options? Check your eligibility in minutes at growthxcap.com/apply. The process is fast, personal, and there’s no credit impact to see what you qualify for.