About the Merchant Cash Advance Calculator
A merchant cash advance (MCA) gives a business a lump sum in exchange for a share of future card sales or a fixed daily or weekly debit. Instead of an interest rate, the cost is quoted as a factor rate — for example 1.35, meaning you repay $1.35 for every $1 advanced. Because repayment happens fast, often within months, a factor rate that looks modest can equal a very high annual percentage rate (APR).
This calculator converts an MCA offer into numbers you can compare with a loan. Enter the advance, factor rate and any fees deducted from funding, then either the holdback percentage and your monthly card sales, or a fixed payment amount. It works out the total payback, each remittance, how many payments and months it takes, and the APR implied by those cash flows.
The APR is solved from the actual schedule: the cash you receive after fees against every remittance on its date, the same present-value method used for loan APRs. Faster sales mean faster payback and a higher APR for the same factor rate. Remittances are assumed to be the same each period; in a real holdback arrangement they rise and fall with your sales. An MCA is a purchase of receivables rather than a loan, so lending disclosure rules may not apply where you are.
With the default inputs, the effective apr is 115.2%. Change any value above to recalculate instantly.
How to use the merchant cash advance calculator
- 1Enter the advance amount and the factor rate from your offer.
- 2Enter any fees deducted from the funding.
- 3Choose holdback and enter your holdback percentage and monthly card sales, or choose a fixed payment.
- 4Pick the remittance schedule: business-day, calendar-day or weekly.
- 5Read the APR, payoff time and total cost, and compare them with loan offers.
Formula and method
The total payback is the advance A times the factor rate F. In holdback mode each remittance is your monthly card sales times the holdback percentage h, divided by the number of remittances per month (about 21 business days, 30 calendar days or 4.33 weeks). The number of remittances is the payback divided by the payment, rounded up, with a smaller final payment.
The APR is found by solving for the periodic rate i at which the present value of all remittances equals the cash you actually received (the advance minus fees deducted at funding), then multiplying by the number of remittances per year — the same actuarial method used for loan APRs. The effective annual rate compounds that periodic rate instead: (1 + i)^periods − 1. Total cost is the payback minus the net cash received.
- A
- Advance amount
- F
- Factor rate
- h
- Holdback percentage of card sales
- i
- Implied rate per remittance period
Worked examples
$50,000 advance at 1.35, 12% holdback, $80,000 monthly sales
Payback is $50,000 × 1.35 = $67,500. A 12% holdback on $80,000 of monthly sales, collected over 21 business days, is about $457.14 a day, so it takes 148 remittances — roughly 7 months. Receiving $49,000 after the $1,000 fee and repaying $67,500 that quickly works out to an APR of about 115%.
Fixed $450 daily payment
With a fixed $450 business-day debit, $67,500 is repaid in exactly 150 payments, about 7.1 months. The cost is still $67,500 − $49,000 = $18,500.
$30,000 at 1.25, weekly $1,000 payments, no fees
Payback is $37,500, repaid with 37 weekly payments of $1,000 and a final $500 — 38 payments over about 8.8 months. The implied APR is about 63% — lower than the daily example because the factor rate is smaller and the money is repaid more slowly, yet still far above typical bank loan rates.
Frequently asked questions
What is a factor rate?+
A factor rate is the multiple of the advance you repay, usually between about 1.1 and 1.5. A $50,000 advance at a 1.35 factor rate costs $17,500 regardless of how fast it is repaid, which is why the APR rises when you repay quickly.
How do I convert a factor rate to APR?+
You need the repayment schedule. Find the periodic rate at which the remittances’ present value equals the cash you received, then multiply by the number of periods per year. A rough shortcut is (factor − 1) ÷ payoff time in years, but it understates the true APR because the balance falls as you pay.
What is a holdback or retrieval rate?+
The holdback is the percentage of daily card sales the MCA provider collects until the payback is complete, commonly around 10% to 20%. When sales slow, remittances shrink and payback takes longer, which lowers the effective APR but extends the obligation.
Is a merchant cash advance a loan?+
Legally, an MCA is usually structured as a purchase of future receivables, not a loan, so usury limits and loan disclosure laws may not apply. Some US states, including New York and California, now require APR-style cost disclosures for commercial financing like MCAs.
Can I pay off a merchant cash advance early to save money?+
Usually not much. Because the cost is fixed by the factor rate, paying early often means paying the full payback anyway unless the contract offers an early payoff discount. Ask for any prepayment discount in writing before signing.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.