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Merchant Cash Advance Calculator: Holdback, Payback Time and Estimated APR
See what a merchant cash advance really costs when it's repaid as a percentage of your sales, and how the cost changes if sales speed up or slow down.
Results
Total payback
$67,500
$17,500 total cost · $50,000 net proceeds
Remittance per business day
$571.43
Estimated time to repay
5.7 months
119 business days
Estimated APR
134.2%
| Scenario | Monthly receipts | Time to repay | Estimated APR |
|---|---|---|---|
| Receipts 25% lower | $75,000 | 7.5 months | 100.9% |
| Your receipts | $100,000 | 5.7 months | 134.2% |
| Receipts 25% higher | $125,000 | 4.5 months | 167.5% |
How a merchant cash advance works
A merchant cash advance (MCA) gives you a lump sum in exchange for a share of your future receipts. You repay a fixed amount, the advance multiplied by the factor rate, through a holdback: a percentage of your card or bank deposits collected each business day until the full amount is paid.
Because the cost is fixed rather than charged as interest over time, the factor rate alone doesn't tell you how expensive the money is. The same 1.35 factor costs far more per year if you repay in four months than in twelve. Our guide to factor rates vs APR explains how to compare offers.
How we calculate
Total payback is the advance multiplied by the factor rate. Remittance per business day is your monthly receipts multiplied by the holdback percentage, divided by 21 business days.
Time to repay is the total payback divided by the daily remittance, rounded up; the final remittance is smaller. Estimated APR finds the daily rate at which those remittances equal the funds you actually receive after upfront fees, then multiplies it by 252 business days. We assume receipts stay at the monthly average you enter.
Estimated APR here is a nominal annual rate: the rate per payment period multiplied by the number of periods in a year, the convention APR disclosures use. It isn't an effective annual rate, which compounds and comes out higher. It's our estimate for comparison, not the APR a provider must disclose under state rules, which set their own methods. These formulas are covered by automated tests and checked against independent calculations. Results remain estimates rather than provider disclosures.
Questions to ask before you sign
- What's the total amount I'll repay, in dollars, and is it in writing?
- Is repayment a true percentage of my receipts, or a fixed daily or weekly debit?
- If my sales drop, how do I request an adjustment, and how long does it take?
- Which fees are deducted from the funds I receive?
- Is there a discount if I pay the balance off early?
- What counts as a default, and am I asked to sign a personal guarantee?
- Can I take other financing while this advance is outstanding?
Questions
Is a merchant cash advance a loan?
MCAs are usually structured as a purchase of your future receipts rather than a loan, which is why they're priced with a factor rate instead of an interest rate. Read the agreement itself to see how yours is structured.
Why does the estimated APR change when my sales change?
The dollar cost is fixed. If sales are strong, the holdback collects that fixed cost faster, so the annualized rate rises. If sales are slow, repayment takes longer and the annualized rate falls, even though you pay the same total.
Does paying early reduce what I owe?
Only if your agreement includes an early-payoff discount. With many advances, the total payback is fixed, so paying early doesn't lower the dollar cost. Ask for any discount schedule in writing.
Is the estimated APR the same as the APR a provider discloses?
Not necessarily. Providers that must disclose an estimated APR follow the method their state requires, which can use different assumptions about your sales. Use this calculator to compare offers on the same basis, and rely on the provider's disclosed terms for the contract.
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