Calculator
Merchant cash advance true cost calculator
A merchant cash advance is priced with a factor rate rather than an interest rate, and repayment is taken daily or weekly. Because you start repaying immediately, the average balance you hold is far below the advance amount, so the annualised cost is much higher than the factor rate suggests.
Educational estimates only. This page is general information, not financial advice. Cost of Financing does not offer, broker or arrange loans, and we accept no lender sponsorships, referral fees or lead payments.
Your offer
Typical range 1.1 to 1.5. A 1.35 factor on $50,000 means you repay $67,500.
Daily remittances are assumed to run on 252 business days per year.
The fixed amount debited each period. If your deal uses a percentage of card sales, enter your average.
Used as a sanity check. The holdback amount drives the actual schedule below.
Often deducted from the amount wired to you.
Effective APR
102.1% to 130.5%
Central estimate 113.5%. This is the number an MCA offer sheet almost never shows.
Total payback
$67,500
Total cost of capital
$18,500
How the money moves
Cash actually wired to you
advance less upfront fees
$49,000
Daily payment
$450.00
Number of payments
about 7.1 months to clear
150
Total repaid
$67,500
Cost per dollar borrowed
0.37 dollars
Effective APR, central
113.5%
Read this before you sign. Paying faster does not save you money on a standard merchant cash advance. The payback is fixed at the factor rate, so an early payoff raises the effective APR rather than lowering the cost, unless the contract includes an explicit discount for early settlement.
How we estimate this
Total payback is the advance multiplied by the factor rate. Total cost of capital is the payback minus the advance, plus any upfront fees. Neither of those figures tells you whether the money is expensive relative to other options, because they ignore how long you hold the funds.
To get an effective APR we treat the deal as a level payment loan. The amount financed is the cash actually wired to you. The payments are the daily or weekly holdbacks, and the number of payments is the total payback divided by the holdback. We then solve numerically for the periodic rate that makes the present value of those payments equal the amount financed, and annualise it by the number of periods in a year, 252 for daily and 52 for weekly.
- The published range is about 10 percent below and 15 percent above the central figure.
- Faster remittance shortens the term and pushes the APR up. Slower remittance lowers it.
- Percentage of sales deals vary with revenue, so the true APR is only known after the advance is fully repaid.
Why the APR looks so high
A factor rate of 1.35 repaid over nine months is not a 35 percent annual cost. You never hold the full advance for the full period, because repayment starts within days. Average outstanding balance is roughly half the advance, which roughly doubles the annualised rate, and short terms compress it further.
Read the full methodology for assumptions and sources.
Educational estimates only. This page is general information, not financial advice. Cost of Financing does not offer, broker or arrange loans, and we accept no lender sponsorships, referral fees or lead payments.