The 60-second answer
Processor-embedded financing is capital offered by the company that already processes your payments — Toast, Square, Stripe, PayPal, or Shopify. There's no outside application: the processor watches your sales in real time, pre-computes an offer, and surfaces it in your dashboard. Repayment is deducted automatically as a percentage of your daily sales on that platform.
Because the processor sees your revenue before any underwriter would, these offers are typically cheaper than a traditional merchant cash advance — flat fees that work out to roughly a 1.10–1.16 factor, versus 1.25–1.45 for a typical MCA. If you have a processor offer and it covers your need, it's usually the first thing to say yes to.
The catch: you can't shop it, you can't size it, and you can't leave the processor while you're repaying it. Those three constraints decide everything below.
How processor financing actually works
Traditional funding starts with an application. Processor financing starts with surveillance — in the benign sense. Toast sees every card swipe in your restaurant. Square sees every tap at your counter. Stripe sees every online checkout. PayPal and Shopify see your whole store. Each runs models on that stream and decides, continuously, whether you're worth an offer and how large.
When the model says yes, three things distinguish the offer from anything a broker sends you:
- No outside application. No bank statements to upload, no broker, no stips. Accepting typically takes minutes and involves no hard credit pull.
- Repayment rides the processing rail. A fixed percentage of each day's sales on that platform is withheld before the money reaches your bank account. Slow day, smaller payment; big day, bigger payment.
- One flat fee, no interest clock. Like an MCA factor rate, the fee is fixed at signing. Repaying faster doesn't reduce it — it just raises your effective APR. (If that math is new to you, read how factor rates work first.)
One structural note: these products are legally a mix of loans and merchant cash advances. Square Loans and Stripe Capital are typically issued as loans through partner banks (Square Financial Services; Celtic Bank for Stripe). Toast Capital is also bank-issued (WebBank). Shopify Capital is an MCA in most states and a loan in others. PayPal Working Capital is a loan (WebBank). For your cash flow the difference is mostly invisible — the repayment mechanics feel the same.
The five providers, side by side
All figures below are typical, based on what the providers publish — none of the five posts a rate card, and every offer is individually priced from your processing history.
| Provider | Who's eligible | Repayment style | Typical range | Best for |
|---|---|---|---|---|
| Toast Capital | Restaurants processing on Toast POS; offer appears in the Toast dashboard | Fixed % of daily Toast card sales, typically targeting payoff within ~90–360 days | Typically ~$5K–$300K | Toast restaurants that want the fastest, lowest-friction capital available to them |
| Square Loans | Active Square sellers; offers are pre-computed from processing history | Fixed % of daily Square card sales, with a minimum paid every 60 days; max ~18-month payoff | Typically ~$100–$250K | Card-heavy retail and service businesses already on Square |
| Stripe Capital | Businesses processing on Stripe (SaaS, e-commerce, platforms); offer-based, no open application | Fixed % of daily Stripe volume plus a flat fee, with a minimum every 60 days | Typically up to ~$150K on a first offer | Online businesses whose revenue flows almost entirely through Stripe |
| PayPal Working Capital | PayPal Business accounts, typically $15K+ in annual PayPal sales | You choose a % of PayPal sales (roughly 10–30%); minimum of 10% of the total every 90 days | Typically up to ~$150K–$200K | Sellers with heavy PayPal volume who want to dial their own repayment speed |
| Shopify Capital | Shopify merchants; eligibility computed from store sales, offer appears in admin | Fixed remittance % of daily store sales; structured as an MCA or loan depending on state | Typically ~$200–$2M | Shopify DTC brands funding inventory ahead of a demand spike |
Toast Capital
Restaurant-only, because Toast is restaurant-only. Offers typically run ~$5K–$300K and are repaid as a fixed percentage of your Toast card sales, generally aimed at payoff within a year. The pitch is speed and zero friction for a business category banks avoid. The constraint is concentration: repayment tracks your Toast card volume, so a cash-heavy or seasonal restaurant should model the slow months carefully. Full watch-outs in our Toast Capital review, and if you're weighing it against a traditional advance, we wrote a dedicated restaurant MCA vs Toast Capital vs Square comparison.
Square Loans (formerly Square Capital)
The oldest and most standardized of the five. Offers typically range ~$100–$250K, repaid via a fixed percentage of daily Square card sales — with a wrinkle Toast doesn't have: a minimum payment every 60 days regardless of sales, and a maximum ~18-month payoff. That minimum matters for seasonal sellers: a dead January doesn't pause your obligation. Details in our Square Loans review.
Stripe Capital
Built for online businesses — SaaS, e-commerce, marketplaces — whose revenue runs through Stripe. First offers typically top out around ~$150K, with a flat fee and a fixed percentage of daily Stripe volume, plus the same 60-day minimum-payment mechanic as Square. If your revenue is split across Stripe and other rails (Amazon, PayPal, wholesale invoices), the offer will be sized only on what Stripe can see — which is the most common reason Stripe offers come in small. Our Stripe Capital review covers the sizing problem; our guide to e-commerce funding across Amazon, Stripe, and Shopify covers what to do about it.
PayPal Working Capital
The most merchant-controllable of the five: you choose your own repayment percentage, typically between roughly 10% and 30% of PayPal sales — a lower percentage means a higher fee, and vice versa. Eligibility typically requires an established PayPal Business account with ~$15K+ in annual PayPal volume; loans run up to ~$150K–$200K. The guardrail is a minimum of 10% of the total owed every 90 days. Full breakdown in our PayPal Working Capital review.
Shopify Capital
The widest range of the five — typically ~$200 up to $2M — because Shopify funds everyone from side-project stores to nine-figure DTC brands. Repayment is a fixed remittance percentage of daily store sales; the product is structured as an MCA in most states and a loan in a few. It's the natural inventory-financing tool for a Shopify brand heading into Q4. The concentration risk is the same as Toast's: your funding source and your sales platform are now the same company. Our Shopify Capital review has the details.
Decision guide: when you hold more than one offer
Plenty of merchants are eligible on two platforms at once — a restaurant on Toast that sells merch on Shopify, a retailer on Square with a PayPal store. When you have multiple offers, don't compare the dollar amounts. Compare these, in order:
- 1. Effective cost. Divide total repayment by amount funded to get the factor. A $50,000 offer repaying $56,500 is a 1.13 factor. Compute it for each offer — the marketing pages won't do it for you.
- 2. Deduction percentage against your margin. A 15% holdback on a platform that carries 90% of your revenue is a much bigger bite than 17% on a platform that carries 30% of it. Take the offer that rides your secondary sales channel if the costs are close — it leaves your primary cash flow intact.
- 3. Minimum-payment clauses. Square and Stripe typically enforce 60-day minimums; PayPal enforces 90-day minimums. If your revenue is seasonal, an offer with no calendar minimum (or the longest one) is worth a slightly higher fee.
- 4. Platform lock-in horizon. Whichever offer you accept, you're committed to that processor until it's repaid. Take the offer on the platform you're most certain you'll still be using in 12 months.
One thing not to do: accept two processor offers simultaneously because each one individually looks affordable. Two daily deductions on two revenue streams is stacking, even if no broker was involved — the failure math is identical.
When a traditional MCA beats all five
We're a referral platform for traditional funders, so discount this section accordingly — but the honest answer is that processor financing usually wins on price when it's available and sized right. A traditional MCA beats it in five specific situations:
- The offer is too small. Processor models size offers on the volume they can see, typically 10–20% of your annual processing on that platform. If you process $600K on Square but need $150K, Square's model likely won't get there. A traditional funder underwrites your full bank statements — all revenue, all channels.
- Your revenue is split across channels. Cash-heavy restaurants, wholesale invoices, multiple processors — anything the platform can't see doesn't count toward your offer. An MCA underwriter counts all of it.
- You might switch platforms. Mid-repayment processor switches typically trigger acceleration — the whole balance due at once. If a POS migration is even on your roadmap, don't chain yourself to the incumbent.
- You have no offer. Processor financing is invitation-only. Newer accounts, declining volume, or an opaque model decision means no offer — and there's no application to force the issue. Traditional funders exist precisely because you can apply.
- You need structure the platform doesn't sell. Longer terms, weekly instead of daily remittance, reconciliation clauses, larger amounts — traditional funders negotiate; dashboards don't.
If any of those describe you, start with our full 2026 funder ranking — or jump straight to the vertical hubs: best restaurant funding if you're weighing Toast or Square, and best e-commerce funding if you're weighing Stripe, PayPal, or Shopify.
The fine print all five share
Before accepting any processor offer, check these three clauses:
- Acceleration on leaving. What happens to the balance if you stop processing on the platform? (Typically: it all comes due, via bank debit.)
- Renewal mechanics. Most platforms offer a renewal when you're 50–75% repaid. Renewing rolls you into a new fee before you've finished paying the old one — the same renewal-treadmill economics as traditional MCA renewals.
- What's actually deducted. Toast and Square deduct from card sales on their rail; Shopify from store sales; PayPal from PayPal sales. Know which number your percentage applies to before you model the payment.
Frequently asked questions
- Can I have both Square Loans and a merchant cash advance?
- Often yes, mechanically — Square repays from your Square card sales while a traditional MCA debits your bank account, so they don't collide on the same rail. But most MCA funders treat an active Square Loan as an existing position when they underwrite, and stacking a daily-ACH MCA on top of a processor deduction squeezes cash flow from two directions at once. Disclose it, model both payments against your worst weeks, and read your Square agreement — taking additional financing can violate some processor terms.
- Which processor financing is cheapest?
- None of the five publish a rate card — every offer is priced individually from your processing history. In practice all five typically land in a similar band: a flat fee roughly equivalent to a 1.10–1.16 factor, which usually undercuts a traditional MCA's 1.25–1.45 factor for comparable merchants. The real cost difference between them is repayment speed: a higher deduction percentage means a higher effective APR for the same flat fee.
- Do Toast Capital, Square, Stripe, PayPal, or Shopify offers affect my credit score?
- Accepting a pre-computed offer typically involves no hard credit pull — eligibility is based on your processing data, which is why these offers exist at all. That's a genuine advantage over most traditional funding. Repayment behavior generally isn't reported to consumer credit bureaus either, which cuts both ways: it won't build your credit, but a rough patch won't show up there.
- What happens if I switch POS or payment processors while repaying?
- This is the trap in every processor-financing agreement. Repayment is deducted from sales on that processor, so leaving Toast, Square, Stripe, PayPal, or Shopify mid-repayment typically triggers an acceleration clause — the full remaining balance can come due, often via direct bank debit. If you're considering a POS switch in the next 12 months, take a traditional MCA instead; it doesn't care who processes your cards.