Merchant Cash Advance Cost Calculator
Turn a merchant cash advance factor rate into real dollars and an estimated APR, so you can see how expensive that "1.3" really is.
How it works
Total repayment = advance × factor rate · Cost = repayment − advance · Estimated APR = cost ÷ advance × 365 ÷ (months × 30) × 100
A merchant cash advance is not quoted as an interest rate; it is quoted as a factor rate, a flat multiple of the advance. Because the multiple is fixed no matter how quickly you repay, the shorter the actual repayment term, the higher the true annual cost. Repayment is usually taken as a daily or weekly slice of card sales, so faster sales mean faster — and effectively more expensive — repayment. Annualising the flat cost over the expected term is an approximation, but it exposes APRs that frequently run from 40% to well over 100%.
Worked example
A $20,000 advance at a 1.3 factor means repaying $26,000 — a $6,000 cost. Repaid over roughly 9 months (about 270 days), the estimated APR is 6,000 ÷ 20,000 × 365 ÷ 270 = about 41%, with monthly remittances near $2,889.
Frequently asked questions
What is a factor rate?
It is the total multiple you repay, not an interest rate. A 1.3 factor on $20,000 means you repay $26,000 regardless of how long it takes. Because it does not fall when you repay early, an MCA can be far pricier than its factor rate suggests.
Why does repaying faster cost more in APR terms?
The dollar cost is fixed by the factor rate, so paying it back in six months instead of twelve packs the same cost into half the time — which doubles the annualised rate. Unlike a normal loan, early repayment gives you no discount.
How accurate is the estimated APR?
It is an approximation. MCAs are repaid through a fluctuating daily card-sales holdback, so the true term varies with your revenue. The estimate uses your expected term; a shorter actual term means an even higher real APR.
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Educational estimate, not financial advice.