Merchant Cash Advance Cost & APR Calculator
Enter the advance amount, factor rate, upfront fees, card sales, and holdback percentage to estimate cash received, repayment, payoff time, and APR. The result treats the advance as a cash-flow comparison so you can compare it with other financing options.
Estimated APR65.63%
- Net cash received
- $49,000.00
- Total repayment
- $65,000.00
- Total financing cost
- $16,000.00
- Estimated monthly remittance
- $6,000.00
- Estimated daily remittance
- $276.88
- Estimated payoff time
- 11 months
- Effective annual cost
- 92.6%
- Final remittance
- $209.97
APR is solved from net cash received today and projected daily remittances until the repayment amount is satisfied.
The final remittance may be smaller than the normal daily remittance when the balance does not divide evenly.
How to use this calculator
- Enter the stated cash advance amount before any fees are withheld.
- Enter the factor rate from the agreement, such as 1.30.
- Enter upfront fees deducted from proceeds and your average monthly card sales.
- Enter the holdback percentage and processing days per month used for remittances.
- Compare net cash received, repayment, payoff time, APR, and effective annual cost.
How the MCA cost is calculated
A merchant cash advance usually quotes a factor rate instead of an interest rate. The factor rate sets the total repayment, while the holdback percentage controls how quickly the provider collects from future card sales. This calculator separates those pieces so the cost is visible in dollars and as an annualized cash-flow rate.
Let A be the advance amount, F the factor rate, U upfront fees, S average monthly card sales, p the holdback percent, and B processing days per month. The calculator uses these formulas:
N = A - U
P = A x F
C = P - N
Q = S x (p / 100)
D = Q / B
T = P / Q
- N is net cash received after fees deducted upfront.
- P is total repayment required by the factor rate.
- C is total financing cost.
- Q is estimated monthly remittance.
- D is estimated daily remittance.
- T is the estimated payoff time in months.
APR is solved from the actual cash-flow timing. The calculator finds the daily rate r that makes net proceeds equal the present value of the projected remittances:
N = sum D / (1 + r)^k + L / (1 + r)^(n + 1)
Here n is the number of full daily remittances and L is any final partial remittance. The simple APR is r x 12 x B x 100. The effective annual cost is ((1 + r)^(12 x B) - 1) x 100.
What moves the APR most
The factor rate and upfront fees raise the cost directly, but speed matters just as much. A 1.30 factor rate repaid over six months is more expensive on an annualized basis than the same factor rate repaid over twelve months. Higher sales or a higher holdback percentage can shorten payoff time, which may improve cash-flow flexibility after payoff but also raises the annualized cost of the advance.
Net proceeds also matter. If fees are withheld from the advance, the business receives less cash while still repaying the full purchased amount. That is why two offers with the same factor rate can have different APRs.
What this calculator leaves out
The projection assumes sales stay constant and every eligible sale is subject to the stated holdback. It does not model reconciliation provisions, fixed ACH withdrawals, renewals, late charges, defaults, minimum payment clauses, split processors, or changes in card volume. Some providers add fees to the repayment balance instead of deducting them from proceeds, so match the fee input to the agreement you are reviewing.
The APR shown is a cash-flow comparison metric. It may differ from a statutory disclosure calculation. To compare a supplier cash discount with borrowing, use the early payment discount vs borrowing calculator.
Worked example
Suppose the stated advance is $50,000 with a 1.30 factor rate and $1,000 in fees withheld upfront. Net cash received is $49,000. Total repayment is $50,000 x 1.30, or $65,000, so the financing cost is $16,000.
If average monthly card sales are $40,000 and the holdback is 15%, the projected monthly remittance is $6,000. With 21.67 processing days per month, the daily remittance is about $276.88. The payoff time is $65,000 / $6,000, or about 10.8 months.
The daily cash-flow rate that discounts those projected remittances back to $49,000 is about 0.2524% per processing day. That produces an estimated APR of about 65.63% and an effective annual cost of about 92.60%. The final remittance is about $209.97 because the balance does not divide evenly by the normal daily remittance.
Common questions
How is a merchant cash advance factor rate converted to APR?
The factor rate first sets the total repayment by multiplying the advance amount. APR then depends on net cash received and how quickly projected remittances repay that amount. This calculator solves the daily cash-flow rate from those payments and annualizes it using the processing days per month.
What is the difference between factor rate and interest rate?
A factor rate is a multiplier applied to the advance amount, so a $50,000 advance at 1.30 requires $65,000 of repayment. An interest rate is charged over time on a balance. Because a factor rate does not by itself show timing or fees, it cannot be compared directly with APR without a cash-flow calculation.
How much cash do I actually receive after MCA fees?
Net cash received is the stated advance amount minus fees deducted upfront. If the provider withholds $1,000 from a $50,000 advance, the business receives $49,000 but still repays the amount set by the factor rate.
How does the holdback percentage affect daily payments and payoff time?
The holdback percentage is applied to eligible card sales to estimate remittances. A higher holdback increases daily payments and shortens payoff time if sales stay the same. A shorter payoff can raise the annualized APR because the same dollar cost is paid over fewer months.
What happens to the payoff date when sales rise or fall?
If the agreement remits a percentage of sales, higher sales usually speed up payoff and lower sales slow it down. This calculator uses one average monthly sales amount, so it does not show seasonal swings or month-by-month reconciliation.
Are merchant cash advances considered loans?
Many MCA contracts are structured as purchases of future receivables rather than loans, but classification and disclosure rules vary by jurisdiction. The APR here is used to compare cash flows, not to decide legal status.