Micro Advance
A micro advance is an MCA product sized $5,000-$25,000 — designed for very small businesses or first-time MCA borrowers — typically with simplified underwriting, faster funding, and higher per-dollar fees due to fixed origination cost dynamics.
Why This Matters
Micro advances open MCA access to merchants too small for standard MCA programs (which typically minimum $25K-$50K). The product economics work for funders only with simplified underwriting (limited bank statement analysis, automated decisioning) that keeps origination cost proportionate to small advance size. Micro advances often serve as introduction points: merchants establish funding history with small initial advances, then qualify for larger renewal funding once payment history is established. APR-equivalent cost of micro advances often runs higher than larger advances due to fixed-cost overhead spread across smaller principal.
Frequently Asked Questions
Frequently Asked Questions
Why do micro advances cost more per dollar than larger MCAs?
Origination, underwriting, and servicing costs are largely fixed per deal regardless of size. A $10K advance carries similar overhead to a $100K advance, so per-dollar pricing must be higher to cover operations cost. Funders offering micro advances accept lower margin to build merchant relationships for future larger deals.
What merchants does micro-advance serve?
Very small businesses ($5K-$25K monthly revenue), first-time business borrowers without prior MCA history, businesses needing specific small-dollar capital (small equipment purchase, small inventory order, payroll bridge). Merchants graduate to standard MCA programs once revenue and funding history justify larger amounts.