Restaurant MCA vs Toast Capital vs Square Capital — the honest 2026 three-way.

The 60-second answer

For a healthy restaurant on Toast or Square doing $40K–$120K/month in processing, the POS-native capital products (Toast Capital, Square Capital) are almost always cheaper than a traditional MCA on the same amount. They self-reconcile (the payment is a % of each sale, not a fixed daily ACH), the underwriting is automatic, and the factor rates run 1.18–1.24 versus 1.28–1.40 from outside funders.

But they cap out. Toast tops out around 50–60% of trailing 4-month Toast processing. Square tops out around 35% of trailing 12-month volume. If you need $150K+ on a single advance, or if you don't run Toast/Square, a traditional MCA is the only option that scales. The trade-off is fixed daily ACH instead of revenue-share holdback.

How Toast Capital works

Toast Capital is the embedded financing product inside the Toast POS. If you're already processing on Toast, Toast monitors your trailing volume and surfaces a pre-approved capital offer in the Toast dashboard — typically 50–60% of trailing 4-month gross sales. You accept the offer in the dashboard, funds land in 1–3 business days, and Toast deducts a fixed percentage (usually 8–14%) of every Toast-processed transaction until the loan is repaid.

Structurally, Toast Capital offers are commercial loans (issued through WebBank in most states), not merchant cash advances — even though they share the holdback mechanic. That legal distinction matters for prepayment treatment, default consequences, and which state disclosure laws apply.

• Offer size: $5K–$200K (typical), capped at ~50–60% of trailing volume
• Factor equivalent: ~1.18–1.24 on a 9-month repayment
• Holdback: 8–14% of each Toast-processed sale
• Time to fund: 1–3 business days
• Reconciliation: Automatic — slow week = smaller deduction
• Lock-in: If you leave Toast as your POS mid-loan, the balance accelerates

How Square Capital works

Square Capital (now branded as Square Loans in most US markets, issued via Celtic Bank) is structurally identical to Toast — a percentage holdback against your Square sales until repaid. Square's offer engine pulls from your trailing 12-month Square processing and surfaces a pre-approved amount inside the Square dashboard. Accept it, funds hit your Square balance in 1 business day, holdback starts on the next sale.

• Offer size: $300–$350K (rare ceiling), most offers $5K–$75K
• Factor equivalent: ~1.10–1.16 on smaller offers (under $25K), 1.18–1.24 on larger
• Holdback: 9–13% of each Square-processed sale
• Time to fund: 1 business day (often same-day for small offers)
• Reconciliation: Automatic, like Toast
• Lock-in: Same processor-change acceleration clause

How a traditional MCA works for restaurants

You apply to an outside funder (Credibly, Rapid Finance, CFG, Fora, Kapitus, On Deck, etc.) with 3–6 months of bank statements. They underwrite based on total deposit volume (not just card processing), so a restaurant with significant cash, delivery-app, or check deposits gets credit for revenue Toast and Square don't see. The funder offers a lump sum at a fixed factor rate (1.28–1.40 for a typical mid-tier restaurant), and you repay via fixed daily ACH from your business bank account.

• Offer size: $10K–$500K, sometimes higher for established restaurants
• Factor: 1.28–1.40 (mid-tier), 1.20–1.30 (premium tier with strong credit)
• Repayment: Fixed daily ACH, typically 9–15 months
• Time to fund: 1–3 business days
• Reconciliation: Only on funders that explicitly offer it (CFG, Credibly do; many don't)

The worked-example comparison

Restaurant doing $80K/month in total revenue, of which $55K is Toast card processing and $25K is cash, delivery apps, and gift card redemptions. They need $50,000 for a kitchen renovation.

• Toast Capital offer: ~$30K max (50% of trailing 4-month Toast volume). Insufficient. Cost on what they would offer: ~$5,400 (factor 1.18).
• Square Capital: Not eligible — they're on Toast, not Square.
• Traditional MCA at 1.32 / 12 months: $50,000 funded. Total payback $66,000. Daily ACH ~$262/day across 252 business days. Total fee: $16,000.

Verdict: traditional MCA is the only option that funds the full $50K. The $16K fee is the cost of getting the capital you actually need. Splitting the project (take $30K Toast + delay the rest) is also viable if the renovation can phase.

When Toast Capital wins

• You're already on Toast as your primary POS
• The amount you need is under ~50% of your trailing 4-month Toast volume
• You don't want a separate UCC-1 filing on your books
• You can absorb a 10–14% holdback on every Toast sale without it killing your weekly cash
• You have no plans to leave Toast as your POS in the next 12 months

When Square Capital wins

• You're on Square as your primary processor
• The amount you need is small ($5K–$30K) and you want it tomorrow
• You don't want any new application or credit pull
• You're not planning a POS migration in the next 12 months

When a traditional MCA wins

• You need more than what Toast/Square will offer (typically $50K+)
• You don't run Toast or Square as your primary processor
• You have significant non-card revenue (cash, delivery, gift cards) that boosts your traditional underwriting profile
• You want a fixed daily payment instead of a percentage of every sale
• You want to keep your POS choice open

The lock-in clause most restaurants miss

Both Toast Capital and Square Capital include processor-change acceleration. If you decide mid-loan that you want to switch POS — to TouchBistro, SpotOn, Lightspeed, or anyone else — the remaining loan balance becomes immediately due. That's a real cost when restaurants find a better POS deal 6 months into an 18-month repayment.

A traditional MCA doesn't care about your POS. The daily ACH pulls from your business bank account regardless of which processor is feeding it. That flexibility is worth real money for restaurants that anticipate a POS evaluation in the next year.

Three things to verify before signing any of them

• The APR-equivalent. Toast and Square don't publish APR — but California and New York commercial-financing disclosure laws now require them to quote it on request. Ask. The APR-equivalent on a Toast/Square offer typically runs 30–50%; a traditional MCA runs 50–110%.
• The prepayment treatment. Toast and Square loans, as actual loans, do give back unaccrued interest on prepayment. Most traditional MCAs charge the full factor regardless of how fast you repay.
• The default consequence. Toast and Square loans default through normal commercial-loan recourse (the issuing bank's collection process). A traditional MCA can include confession-of-judgment clauses (banned in NY, allowed elsewhere) that let funders pursue collections aggressively.