Merchant Cash Advance Calculator: Find the True Cost of an MCA
Use this MCA calculator to determine the total cost of your merchant cash advance, including fees and interest.
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A merchant cash advance is not a small-business loan. It’s a cash advance in exchange for a cut of your future business sales.
Instead of making monthly installment payments over a set period of time, you make daily or weekly payments, plus fees, until the merchant cash advance is paid in full.
Rather than interest rates, MCAs carry factor rates, which do not represent the total cost of borrowing, also known as the annual percentage rate (APR). When you include origination or closing fees along with the factor rate, APRs for merchant cash advances can reach triple digits.
Paying daily or weekly can cause cash flow problems for your business if your sales are erratic or you hit a rough patch.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
How to use this merchant cash advance calculator
NerdWallet’s MCA calculator helps you determine the true cost of borrowing and whether a merchant cash advance makes sense for your business.
Step 1. Enter your MCA details
Merchant cash advance amount:
Enter the total dollar amount of your cash advance. Keep in mind that the MCA company may give you less to account for any added fees they might charge, like an origination fee. In that case, don’t deduct the added fees from the MCA amount when using the calculator.
Payback terms:
If you know your factor rate, select that option. The factor rate typically ranges from 1.1 to 1.5. A higher factor rate corresponds to higher fees you’ll pay on the merchant cash advance. Enter your factor rate in the next field.
If you don’t know your factor rate, select “total payback amount” and enter the amount in the next field.
Payment is based on:
Select either monthly credit/debit card sales or fixed daily payment.
If you choose monthly credit/debit card sales, enter your estimated monthly credit or debit card sales in the next field.
In the “percent of monthly credit/debit card sales” field, enter the percentage amount (example 10%) that the merchant cash advance provider will deduct from your monthly credit or debit cards until the total borrowed amount is repaid.
If you choose fixed daily payment, enter the amount you expect to repay daily in the next field.
Step 2. Review your results
Approximate daily payment: This is the amount you can expect to pay daily until your MCA is paid back in full.
Repayment period: This is how long it’ll take to repay the MCA. Because your sales will likely fluctuate month to month, your actual repayment period will probably look different.
Total payback amount: This is the total amount that you’ll pay back to the MCA provider. It accounts for the factor rate plus the original advance you took (before any additional fees were deducted).
Effective APR: This is the total annual percentage rate of interest you’ll pay on the borrowed amount per year. Use this figure to compare the cost of an MCA against types of loans, like online business loans.
Total cost of the MCA: This is the total amount you end up paying your MCA company for the ability to take the cash advance. It accounts for the factor rate, plus any additional fees.
» MORE: Best merchant advance companies
What is APR and why is it important?
APR, or annual percentage rate, is a rate that represents the total cost of borrowing money. Unlike the factor or interest rate alone, it paints a better picture of how much you will pay for your loan because it includes fees, closing costs and insurance costs.
Understanding the total cost of borrowing money allows you to compare the best options, and ultimately make the best financing decision for you and your business.
» MORE: Average business loan rates
Alternatives to MCAs
If after using our MCA calculator you find that the total cost of a merchant cash advance is too high for you, here are some other financing options.
If you need fast financing: Online lenders, like Fundbox or Fora Financial, offer loans that may have more favorable terms than MCAs, and can be funded in as little as 24 hours.
If you’re struggling to qualify for a traditional loan: If you lack collateral or are facing credit challenges that are preventing you from qualifying for a traditional loan, lenders like Accion and Bank of America offer loans to borrowers with poor credit and without collateral, respectively.
If you need revolving funding: Business lines of credit offer revolving financing that can be simpler and less expensive than MCAs. Many of them don’t require stellar personal credit, and some can approve lines up to $250,000.
If you're unable to make payments on a current loan: You may be able to temporarily pause your business loan payments.