Merchant Cash Advance (MCA) Calculator

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 its 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 daily 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.

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.

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 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.

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 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.