See what a merchant cash advance really costs. Enter the advance, factor rate and either a holdback percentage of your daily sales or a fixed daily debit, and get the total payback, how long it takes, a month-by-month schedule and the effective APR so you can compare it with a loan.
Last updated:
Advance offer
$
Cash the funder gives you
Usually 1.10 to 1.50
%
Deducted from the funds (0 if none)
Repayment
Repayment type
%
$
Card or bank deposits
$
Enter your values to see the result.
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How to use the Merchant Cash Advance Calculator
Enter the advance amount and factor rate from your offer, plus any origination fee.
Pick the debit schedule (business days, 6 or 7 days a week).
Choose holdback or fixed payment, then enter the holdback % and average daily sales, or the fixed daily amount.
Press Calculate to see the effective APR, total repayment, daily payment and term.
Review the schedule and factor-rate table to compare offers before you sign.
How a merchant cash advance is priced
A merchant cash advance (MCA) gives a business a lump sum in exchange for a share of its future sales. Instead of an interest rate, the offer quotes a factor rate, and repayment comes out of your deposits every payment day until the fixed total is collected.
Total repayment = advance × factor rate.
Daily remittance = average daily sales × holdback % (or a fixed daily ACH amount).
Term in payment days = total repayment ÷ daily remittance. Divide by 21.67 (business days), 26 (6-day) or 30.42 (every day) to get months.
Effective APR = the per-day rate r that makes the present value of all payments equal the net cash received, × payment days per year (260, 312 or 365).
Example: $50,000 at a 1.35 factor with a 15% holdback on $2,500 of daily sales, debited every day, means $67,500 repaid at $375 a day. That takes 180 payments, about 5.9 months. Because the money is repaid quickly while the whole $17,500 cost is fixed, the effective APR lands far above what the factor rate suggests at first glance.
Factor rate vs. APR at a glance
The same factor rate can mean very different APRs depending on how fast you repay. Figures below assume a $10,000 advance, no fees and equal payments every business day (260 a year), rounded.
Factor rate
Cost per $10,000
Repaid in 6 months
Repaid in 9 months
Repaid in 12 months
1.10
$1,000
~38% APR
~26% APR
~19% APR
1.20
$2,000
~75% APR
~50% APR
~38% APR
1.30
$3,000
~109% APR
~73% APR
~55% APR
1.40
$4,000
~142% APR
~95% APR
~71% APR
1.50
$5,000
~174% APR
~116% APR
~87% APR
Use the calculator above for your exact numbers; real APRs also rise with origination fees.
Tips before you accept an MCA
Ask for the total payback in dollars and every fee deducted from the funds, not just the factor rate.
Check whether a holdback is reconciled. With a true holdback, slow sales mean smaller payments; a fixed daily ACH does not adjust.
Watch for stacking. Taking a second advance before the first is repaid can push daily payments past what your cash flow can carry.
Ask about early payoff discounts; without one, paying early does not lower the cost.
Compare against alternatives such as a business line of credit, SBA loan, equipment loan or invoice factoring using the APR, not the factor rate.
Frequently asked questions
What is a factor rate on a merchant cash advance?
A factor rate is a multiplier applied to the advance to set the fixed amount you repay. A $50,000 advance at a 1.35 factor rate means you repay $67,500. Unlike an interest rate, the cost does not shrink if you repay faster, so the shorter the term, the higher the effective APR.
How do I convert a factor rate to APR?
You need the payment schedule. The calculator finds the daily rate at which the present value of all your daily payments equals the cash you actually received, then multiplies by the number of payment days in a year. A 1.35 factor repaid over about 6 months is typically well above 60% APR.
What is the holdback or retrieval rate?
It is the percentage of your daily card or bank deposits the funder collects until the advance is repaid, commonly 5% to 20%. Daily payment = average daily sales × holdback %. A higher holdback repays faster, which shortens the term and raises the APR.
How long does it take to pay off a merchant cash advance?
Term = total repayment ÷ daily payment, counted in payment days. For example, $67,500 ÷ $375 a day = 180 business days, about 8.3 months at 21.67 business days per month. Real terms vary with your sales when the payment is a holdback.
Is a merchant cash advance a loan?
Legally an MCA is usually structured as a purchase of future receivables rather than a loan, which is why it is quoted with a factor rate instead of an APR and why some state lending rules may not apply. Some states now require APR-style cost disclosures for commercial financing.
Does paying off an MCA early save money?
Usually not. The repayment amount is fixed at advance × factor rate, so paying early often saves nothing unless the contract offers an early payoff discount. Ask the funder in writing before you sign.
Why are origination fees included in the APR?
Fees deducted up front reduce the money you can actually use while the repayment stays the same, so the true cost rises. The calculator solves the APR on your net funds (advance minus fees).
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.