Merchant cash advance calculator

How the calculation works

1. Total payback = advance × factor rate. A $50,000 advance at a 1.35 factor rate means repaying $67,500. If the funder quoted a payback amount instead, enter that directly.
2. Money you receive = advance − fees deducted before funding. Origination, underwriting and ACH setup fees are often taken out of the advance, so you get less than the headline amount while still repaying the full payback.
3. The payment schedule. With fixed payments, the payback is split evenly across every business day (Monday to Friday) or every week. With a holdback, the daily payment is your average card sales per business day × the holdback percentage, where a year has 260 business days.
4. The estimated APR is the yearly rate at which those payments exactly repay the money you received. Each payment is discounted by the number of calendar days since funding, and the daily rate is multiplied by 365. This is the actuarial method set out in Regulation Z, Appendix J, the same method lenders use for the APR on consumer loans.

The rule-of-thumb figure divides the cost by the money received and scales it to a year over the full term. It ignores the fact that you start repaying the day after funding, so on average you only hold about half the money for the whole term. That's why it understates the true cost, often by half.

Worked examples

1. A six-month advance with daily payments

A restaurant takes a $50,000 advance at a 1.35 factor rate, repaid in 126 business-day payments starting the day after a Monday funding.

• Total payback: $50,000 × 1.35 = $67,500, so the advance costs $17,500.
• Daily payment: $67,500 ÷ 126 = $535.71.
• The last payment lands 176 calendar days after funding, about 5.8 months.
• Estimated APR: 131.49%. The rule-of-thumb rate is 72.59%, a little over half the true figure.

2. The same advance with a $1,500 fee taken upfront

Now the funder deducts a $1,500 origination fee, so the business receives $48,500 but still repays $67,500. The cost rises to $19,000 and the estimated APR to 145.73%. A fee of 3% of the advance added more than 14 percentage points of APR, because it's paid on day one and the term is short.

3. A holdback on card sales

A retailer with $60,000 of monthly card sales agrees to a 10% holdback on the same $50,000 at 1.35. Daily sales average $60,000 × 12 ÷ 260 = $2,769.23, so the daily remittance is about $276.92. Repaying $67,500 takes 244 payments (the last one smaller, at $207.69), finishing 340 days after funding. The estimated APR is 67.87%.

Here is the counterintuitive part: if sales rise to $80,000 a month, the advance is repaid in 255 days and the APR climbs to 90.54%. If sales fall to $45,000, it takes 455 days and the APR drops to 50.88%. The dollar cost is $17,500 in every case. Only the speed changes.

Assumptions and limitations

• Payments fall on every weekday. US federal holidays are ignored, which shortens the term slightly and nudges the APR up by a fraction.
• In holdback mode, sales are assumed to be spread evenly. Real remittances rise and fall with your sales, so the actual term and APR will differ.
• Early-payoff discounts aren't modeled. Many advances charge the full payback even if you settle early, but some offer a discount, which lowers the real cost.
• Fees charged later, such as NSF, default or stacking fees, aren't included. Add any fee you'll definitely pay to the upfront fees for a rough view.
• A merchant cash advance is legally a purchase of future receivables, not a loan, so Truth in Lending doesn't apply. The APR here is a comparison tool, not a legal disclosure.

When this estimate is wrong

The estimate is only as good as the schedule you enter. It will overstate the cost if your funder reconciles payments down during slow months, and understate it if your sales run ahead of the forecast in holdback mode. If you're comparing against a funder's own disclosure, check that both use the same funding amount (after fees) and the same number of payments before reading anything into a difference.

Frequently asked questions

Is a factor rate the same as an interest rate?

No. A factor rate is a fixed multiple of the advance, owed no matter how fast you repay. A 1.35 factor rate isn't 35% a year: because repayment starts immediately and usually finishes within months, the equivalent APR is typically several times higher.

Why does a shorter term make the APR higher?

The dollar cost stays the same, but you pay it over less time. At 1.35, a 63-payment schedule works out to about 264% APR, 126 payments to 131%, and 252 payments to 66%. The table under the results shows the APR at other factor rates on your schedule.

Do funders have to tell me the APR?

In California and New York, providers must disclose an estimated APR on covered offers. Several other states require cost disclosures without an APR. See our state disclosure law summaries.

What is a good factor rate?

There isn't a universal benchmark, because the APR depends so heavily on the term. Compare offers on the same schedule, and compare the APR against the rate on a term loan or line of credit you might qualify for.

Is my information stored?

No. The calculator runs entirely in your browser. Your inputs are saved only in the page address, so you can bookmark or share a scenario.

Go deeper: factor rate vs. APR,how holdback percentages work, and thefactor rate to APR table.