The Financing Showdown Every Frontier Founder Faces

Welcome to Advance Genie, the 2x per-month newsletter that helps operators in highly stigmatized industries find alternative financing methods.

Traditional banks won't touch you.

VCs want too much equity and take forever to decide.

But you need capital NOW to seize that opportunity staring you in the face.

This leaves you with two main alternatives: Merchant Cash Advances (MCAs) and Revenue-Based Financing (RBF).

Both skip the traditional banking BS.

But they work very differently.

Today, we're breaking down exactly how each one works, what they really cost, and which one fits your specific business.

Let's dive in.

The Merchant Cash Advance (MCA)

An MCA isn't a loan.

It's selling a piece of your future sales for cash today.

Think of it like this: You're a cannabis dispensary that needs $20,000 for inventory before 4/20. An MCA provider says "We'll give you that $20,000 right now. In return, we'll take 15% of your daily credit card sales until you pay us back $26,000."

That's it.

MCAs don't use interest rates.

They use "factor rates."

Here's what that means:

• You borrow $20,000 with a 1.3 factor rate

• You'll repay $26,000 total ($20,000 x 1.3)

• That $6,000 fee is fixed, whether you repay in 3 months or 12 months

This is crucial: The faster you repay, the higher your effective APR.

If you repay in 3 months, that 30% fee becomes a 120% annual rate.

Who Actually Uses MCAs in Frontier Industries

Cannabis Dispensaries

A Denver dispensary used Square Capital's MCA to stock up before recreational sales launched. They needed $50,000 fast for inventory. Banks wouldn't touch them. The MCA funded in 3 days.

Telehealth Startups

A D2C wellness brand selling CBD supplements through PayPal used an MCA to fund a Black Friday marketing push. They knew sales would spike, making the percentage-based repayment manageable.

Revenue-Based Financing (RBF)

RBF is different.

Instead of taking a cut of daily sales, RBF takes a small percentage of your total monthly revenue.

You get a lump sum. You pay it back over time. No equity given up.

Two companies made RBF mainstream: Pipe and Clearco.

Pipe's Approach:

• They connect to your bank account and payment systems

• They analyze your recurring revenue

• They advance you capital based on that data

• You repay with 5-20% of monthly revenue

Clearco's Model:

• Focused on e-commerce brands

• Offers up to $10M for marketing and inventory

• No personal guarantees required

• Revenue share continues until you repay the advance plus their fee

Keep in mind that RBF uses flat fees, typically 6-12% of the advance.

Example:

• You get $100,000 with an 8% fee

• You'll repay $108,000 total

• Payments adjust based on your monthly revenue

If revenue drops 20%, your payment drops 20%.

This predictability helps with cash flow planning.

Who Actually Uses RBF in Frontier Industries

DirectDerm (Telehealth)

This telemedicine provider used RBF from Decathlon Capital in their Series B round. They needed capital to expand into new states but didn't want more dilution.

The RBF let them hire providers and set up operations in 5 new territories.

Encounter Telehealth

They provide mental health services to seniors. Instead of raising another VC round, they used RBF to add 50 new therapists to their platform.

The CEO said it let them "grow on our own terms."

Verma Farms (CBD)

This premium CBD brand reportedly secured seven figures through Pipe to fund a strategic acquisition. Traditional financing would have taken months. Pipe funded in days.

Making the Right Choice for Your Business

Choose an MCA if:

You run a cannabis dispensary with strong daily sales and need quick cash for a can't-miss inventory deal.

Your telehealth platform has a one-time opportunity that requires immediate funding.

You're confident you can repay quickly from increased sales.

Choose RBF if:

You have a subscription-based CBD brand with predictable monthly revenue.

Your crypto SaaS platform needs capital for a 6-month customer acquisition campaign.

You want payment flexibility that adjusts with your revenue.

How We Can Help:

💬 Building something bold in a high-friction industry?

Advance Genie helps you find the right capital tools—without the runaround.

👉 Take the quiz or learn more at advancegenie.com