Revenue-Based Financing and Merchant Cash Advance in Los Angeles

What revenue-based financing and a merchant cash advance actually are

Start with the honest definition, because most of the industry skips it.

A merchant cash advance (MCA) is a purchase agreement, not a loan. A funder pays you a lump sum today and buys a fixed, larger amount of your future receivables in return. You send that amount back through an automatic daily or weekly remittance from your business bank account until the purchased amount is paid. Because it is a sale of receivables rather than a loan, there is no interest rate in the traditional sense. The cost is expressed as the difference between what you received and the total you pay back.

Revenue-based financing (RBF) is the broader, more modern name for the same family of products. Some RBF programs collect a fixed remittance. Others take a set share of each day’s card sales, so the payment goes down when sales are slow. Both are sold on speed and flexibility. Both cost more than a bank loan.

What this means for you:

• Cost is shown as a total payback amount, not a rate. Ask for the total dollars and the number of remittances. That is the whole picture.
• Remittance is daily or weekly, usually Monday through Friday, by ACH. Plan cash flow around it.
• There is no fixed term on a true sales-percentage program; you finish when the purchased amount is paid. Fixed-remittance programs have an estimated term, often 4 to 18 months.
• In California, every offer must come with the state’s SB 1235 commercial-financing disclosure, which shows total cost and payment terms before you sign. If a funder skips it, walk away.

PMF LA is a broker. We do not fund advances. We place your file with the funders on our panel who fit it, show you every offer side by side, and tell you plainly when this is the wrong tool. Learn more about how our brokerage works.

When revenue-based financing is the right tool, and when it is not

This product has a bad reputation because it gets sold to the wrong businesses for the wrong reasons. Used correctly, it solves a specific problem well.

It is the right tool when:

• You need funds in 24 to 48 hours and cannot wait for a term loan approval.
• Your credit is under about 600, or you have a recent tax lien or a past bankruptcy, and term-loan funders have declined you.
• Your deposits are strong but your business is under a year old.
• The money buys something that pays back fast: inventory for a sold-out product, a catering contract deposit, a rush repair that keeps you open.
• The amount is small relative to monthly sales, so the remittance is a fraction of daily deposits.

It is the wrong tool when:

• You qualify for a working capital term loan or a line of credit. Both cost less. We check this first, every time.
• You are using it to pay another advance. That is stacking, and it compounds cost. Consolidation is different; see below.
• The purchase is a long-lived asset. Equipment should be financed over its life, not over nine months.
• Your sales are seasonal and the remittance is fixed. A restaurant in Larchmont taking a fixed daily remittance into February is asking for trouble. Ask for a sales-percentage structure or a reconciliation clause.
• You cannot explain, in one sentence, how the money produces more than it costs.

We say no to about a third of the RBF requests we get and point the owner to a cheaper program or to waiting 60 days. That is the point of using a broker.

The Los Angeles merchant cash advance market, honestly

LA has one of the densest concentrations of MCA funders and brokers in the country, with offices in Koreatown, DTLA, Encino and Beverly Hills. That creates two problems for owners.

First, the phone calls. Once you file a UCC or apply anywhere, you will hear from dozens of brokers, many working off the same lead list, each pushing whatever funder pays them the most that week. Second, stacking. Because so many funders compete here, it is easy to take a second, third or fourth position advance. We regularly see Fashion District wholesalers, Valley auto shops and Hollywood restaurants carrying three or four daily remittances that together exceed their margin.

The businesses that use RBF well in Los Angeles tend to have high card volume and quick inventory turns: restaurants and bars, nail and hair salons, retail on Melrose or in Old Pasadena, auto repair, medical spas, food trucks and caterers, e-commerce sellers shipping from Vernon and the City of Industry. Trucking and construction can use it, but fixed-remittance programs and lumpy receivables mix poorly, so we often steer those to factoring instead.

Our commitment on this page: one application, every offer shown with total payback, and a clear statement of which program we would take if it were our business. If that is a term loan and not an advance, we will say so.

MCA consolidation and stacking: getting out from under daily payments

If you are searching “MCA consolidation,” you probably already know the problem. Two or more advances, each with a daily remittance, and the total coming out of the account every morning is more than the business nets. You are borrowing from the next advance to pay the last one.

Stacking is taking a new advance on top of existing ones. Each new position is smaller, more expensive and shorter, because the funder knows they are behind others. Beyond two positions, almost no reputable funder will help, and the ones who will are the ones to avoid.

Consolidation is the fix. One new facility pays off the existing positions in full, and you are left with a single payment, usually weekly instead of daily, over a longer term. Done right, the total monthly outflow drops meaningfully and the business can breathe.

What we need to structure a consolidation:

• Payoff letters from each existing funder, dated within a few days.
• Four to six months of bank statements, so the funder can see the remittances and the deposits underneath them.
• An honest picture of why the stack happened, and what changed.

Consolidation options depend on how deep the stack is. Two positions with healthy deposits can often move into a single working capital term loan. Three positions usually need a specialized reverse-consolidation program that adds weekly deposits to your account to cover the existing remittances while paying them down. Beyond that, the honest advice may be a workout with the funders, not new money, and we will tell you so rather than sell you a fourth position. Start with the three-question check at /apply and mention the existing advances.

How remittance, holdback and reconciliation work

The mechanics matter because they determine whether the payment fits your cash flow.

• Fixed ACH remittance. The most common structure today. The funder debits the same amount from your business checking account every business day or every week. It does not go up or down with sales unless you request a reconciliation.
• Split or holdback. The older MCA structure. Your card processor sends a set share of each day’s card settlements to the funder before the rest reaches you. Payments rise and fall with sales. It requires switching or linking your processor.
• Reconciliation. Many California agreements let you ask the funder to adjust the fixed remittance if sales drop, so that what you have paid matches the agreed share of actual revenue. This is a real protection. Ask whether the agreement includes it and how to request it.
• Early payoff. Some funders discount the remaining balance if you pay off early, often within the first 30 to 90 days. Others do not. On a nine-month program, this can change the effective cost a great deal. We ask every funder and put the answer on the offer summary.
• Renewals. Once you have paid down roughly half, funders will offer to renew. A renewal that pays off the old balance and gives you fresh cash is fine if you need the cash. A renewal taken only because it was offered is how stacks begin.

Every offer we present includes the remittance amount, the frequency, the total payback and the estimated term in one line, alongside the SB 1235 disclosure. If you cannot see all four, you are not looking at a complete offer.

Revenue-based financing vs. merchant cash advance vs. term loan

People search this comparison because the products get sold with the same words. Here is the qualitative difference, with the numbers left to the disclosure you will receive.

The pattern: as you move right, cost goes down, speed goes down slightly, and the credit and history bar goes up. Our job is to place you as far right as your file allows today, and to move you further right on the next round. Many clients start with RBF and are in a line of credit or SBA loan within a year.

How to get revenue-based financing in Los Angeles in 48 hours

1. Three-question check. Amount, time in business, monthly revenue at /apply. No credit pull.
2. Specialist call. A PMF LA advisor in Century City calls you the same business day. We ask about existing advances, card volume and what the funds are for. If a cheaper program fits, we tell you here.
3. Statements. Three to four months of business bank statements and, if you take cards, your last three processing statements. Payoff letters if consolidating.
4. Offers. Usually within hours. We show every offer with total payback, remittance, frequency, estimated term and early-payoff terms, plus the California disclosure.
5. Fund. Sign electronically, verify the bank account, receive the wire. Most RBF files fund within 24 to 48 hours of a complete file.

Serving all of LA County, from the Port to the Valley, plus Orange County and the Inland Empire. Office visits welcome at 10100 Santa Monica Blvd, Suite 100, Century City.

Revenue-based financing vs. the alternatives in Los Angeles

Ranges are typical, not offers. Every California offer arrives with the SB 1235 disclosure showing total cost and payment terms.

How LA revenue-based financing deals get structured

Examples are illustrative of how PMF LA structures placements; amounts, terms and approval depend on the funder and your file. Not an offer of credit.

Frequently asked questions