Advertiser Disclosure

Merchant Cash Advance Calculator

A merchant cash advance (MCA), sometimes called a business cash advance, is a non-loan financing option for businesses in need of working capital (or money for other business reasons).

Merchant cash advances can be a legitimate and useful type of business financing, but should be handled with care. A bad MCA offer has the potential to send a business into a debt spiral. If you are unsure whether you’re getting a good deal on a cash advance, this calculator is for you.

Merchant Maverick’s Merchant Cash Advance Calculator can be used to estimate MCA repayment metrics to understand the cost of borrowing and easily compare offers. Use this tool to estimate daily repayments, cents on the dollar costs (the amount you pay in fees per dollar borrowed), rough APR, and approximate days to repay.

What Is A Merchant Cash Advance?

A merchant cash advance is a sale of future revenues. In exchange for cash up-front, the merchant agrees to sell a portion of their future revenue at a discount. For example, a business might sell $12,000 of future revenue in exchange for an advance of $10,000. The MCA company collects their revenue by deducting a percentage of the business’s daily sales.

MCAs are often used for short-term business finance needs such as working capital, inventory purchasing, or equipment purchasing.

In practice, merchant cash advances differ from traditional business financing options in a few ways: they do not carry interest rates, the repayment term length is not set, and repayments are not fixed.

Merchant cash advance fees are determined via a number called a factor rate. Multiplying the factor rate by the advanced amount will result in the total payback amount. You can input either the factor rate or the total payback amount into the calculator to get the same results.

Note that factor rates are typically written as a decimal (ex: 1.12), but might be provided to you as a percentage (ex. 12%). You must input the number as a decimal in this calculator. If your factor rate was provided as a percentage, simply add a “1.” to the beginning of the number to convert the number into decimal form.

The payback amount is collected on a daily basis by deducting a small percentage of your daily sales. Because the amount withheld will fluctuate with your cash flow, merchant cash advances do not have set repayment dates; the MCA company simply continues to collect their cut until the total payback amount is reached.

Our calculator uses your monthly credit card sales to estimate your daily payment and days to repay, but in actuality these numbers will change if your sales do not remain consistent. Similarly, the effective APR (annual percentage rate) will change if your sales are inconsistent. Head over to our article on Merchant Cash Advances and APRs for more information.

How To Use The Merchant Cash Advance Calculator

Due to the unusual method of determining fees and collecting repayment for MCAs, many merchants find it difficult to determine whether they’re getting a good deal on a cash advance. If you’re in that boat, we have designed this calculator to give you all the data you need to make an informed decision.

This calculator can be used to determine the approximate dollar amount of daily repayment and the number of days it will take to repay the advance. It can also provide information about the loan as a whole, including the effective APR, the financing cost, the total repayment, and the cents on the dollar cost.

Not sure what all those mean? Read on for a short explanation on each one.

Calculator Input

  • Amount Advanced: The amount received by the merchant from the MCA company. This number is expressed as a dollar amount.
  • Payback Amount OR Factor Rate (choose one based on the information you have; both will return the same results)
    • Payback Amount: The total amount you have to repay to the MCA company. This number is expressed as a dollar amount.
    • Factor Rate: The multiplier used to determine the payback amount. This number must be written as a decimal (such as “1.12”), not as a percentage.
  • Administrative Cost: The fees deducted from the advanced amount before the MCA company sends the money to you. These fees can be called many names, including origination fee, administrative fee, or closing fee. Some companies do not charge any administrative costs. This number is expressed as a dollar amount.
  • Monthly Credit Card Sales: Your average credit card sales per month. This number is expressed as a dollar amount.
  • Percentage Of Sales Withheld: The amount the MCA company is going to withhold from your daily sales. This number is expressed as a percentage.

Calculator Output

  • Approximate Daily Repayment: About how much you’ll have to pay per day. In actuality, this number will fluctuate along with your daily sales, but this estimate can give you an idea of approximately how much you’re looking at paying every day.
  • Approximate Days To Repay: About how many days it will take you to repay. This number is assuming your sales remain consistent; if your sales significantly rise or fall before you repay, the number will change.
  • Effective APR: The approximated Annual Percentage Rate (APR) on the advance. See our article on Merchant Cash Advances and APRs for more information on how to evaluate MCAs using APRs.
  • Financing Cost: The amount you have to pay in fees for borrowing. This number is inclusive of the fixed fee (the fee determined by the factor rate) and the administrative cost.
  • Total Repayment: The total amount you have to repay. This number is inclusive of the advanced amount, the fixed fee, and administrative costs.
  • Cents On The Dollar: The amount you pay in fees per dollar borrowed.

Evaluating & Comparing Cash Advance Offers

The above calculator outputs will give you all the information you need to make informed decisions when evaluating and comparing advance offers, including how much you’ll pay each day, the approximate term length, the true rate of borrowing, and the total cost of financing.

Average Daily Payment

The approximate daily payment can give you an estimate of how much you’ll be paying each day to your MCA company. Naturally, this number will not be exact because your payment will fluctuate with your cash flow.

Approximate Term Length

Assuming your sales remain consistent, the approximate days to repay will tell you roughly how long it will take to repay your advance. If your sales rise or fall, this estimate will change.

The True Rate Of Borrowing

The effective APR (annual percentage rate) gives you an estimate of what your rate of borrowing would be if the loan carried interest. This number can be used to frame your understanding of your merchant cash advance by using a metric commonly provided when borrowing funds. The APR can also help you compare merchant cash advances to loans with interest rates. Head over to Merchant Cash Advances and APRs for more information.

Be aware that the APR shows the rate of borrowing. APR is time dependent, and merchant cash advances often have short term lengths, so a high APR indicates only that you are paying back money very quickly. The APR does not tell you the true cost of financing.

To understand the cost of borrowing, you need to look at the next three numbers:

The True Cost Of Financing

The last three numbers on the calculator—the financing cost, the total repayment, and the cents on the dollar—will help you understand the total amount you’re paying in fees.

The financing cost is how much you’re paying in fees, including the fixed fee (the fee determined by the factor rate) and any administrative costs that might be charged. The total repayment is similar: it’s the financing cost plus the payback amount. And the cents on the dollar is the amount of fees you’re paying per dollar borrowed. All these numbers will give you a good idea of how much you’re paying in exchange for receiving an advance.