This merchant cash advance cost calculator from Rockstone Lending, a small-business funding broker in Yuma, Arizona, multiplies the advance by the factor rate to show the total payback and cost, and estimates remittance time from the holdback and daily card sales you enter. A merchant cash advance is not a loan, and the results are arithmetic, not a quote. Questions: (928) 436-5545.
How the numbers are calculated
- Total payback (the total the funder collects) = advance amount × factor rate
- Cost of the advance = total payback − advance amount
- Estimated daily remittance = average daily card sales × holdback percentage ÷ 100
- Estimated business days = total payback ÷ daily remittance, rounded up
The time estimate assumes the holdback is collected on every business day from steady card sales. Real sales vary, and many funders debit a fixed daily or weekly amount instead of taking a share of each sale, so actual timing will differ. If the agreement states the purchased amount, it should match the total payback here; if it doesn't, ask the funder why. Fees deducted from the money you receive are not included, so check what will actually land in your account.
Factor rate vs. APR
A factor rate is a multiplier that sets the total payback at signing. An interest rate or APR, by contrast, expresses cost per year on a balance that shrinks as it is paid. The two can't be compared directly, because a factor rate says nothing about time.
Time is what makes the difference. The cost of an advance is fixed, but the period over which it is collected is not. If the same total cost is collected over half the time, the cost per year is roughly twice as high. That is why an advance remitted over a short period can be very expensive when its cost is viewed on a yearly basis, even when the factor rate looks modest.
This calculator does not convert a factor rate into an APR. Any such figure is an approximation that depends on the remittance pattern assumed. To compare an MCA with a loan, put the total payback and estimated time beside the total repaid and term of a loan offer; the business loan calculator gives you the loan side.
What changes the result
- Sales go up: with a split, remittance finishes sooner. The total payback stays the same, so the cost per year rises.
- Sales go down: with a split, remittance slows. With fixed debits, the amount stays the same unless you request an adjustment under the agreement's reconciliation terms, if it has them.
- Paying early: usually saves little, because the total payback is fixed, unless the agreement offers an early-payoff discount.
- A second advance: taking another advance while one is still being remitted adds a second set of debits on top of the first.
Before you sign
The calculator covers the arithmetic. The agreement covers everything else: any personal guarantee of performance, a UCC filing, restrictions on selling receivables to anyone else, and default provisions. Read how a merchant cash advance differs from a loan, see how MCAs work, and review our disclosures. Consider having your attorney read the agreement.
By Rockstone Lending · Updated
