Merchant Cash Advance Calculator
Cost Comparison — Same Amount & Repayment Period
| Financing Option | Effective APR | Total Cost | vs. MCA |
|---|---|---|---|
| This MCA | — | — | — |
| Business LOC (20% APR) | 20.0% | — | — |
| Invoice Factoring (3%/30 days) | — | — | — |
| SBA Loan (12% APR) | 12.0% | — | — |
Factor rates and holdback percentages determine your total dollar cost. Daily card sales determine repayment speed — faster repayment means higher effective APR for the same dollar cost.
MCA True Cost Calculator
Convert your merchant cash advance factor rate into a real effective APR — and compare it against alternatives.
How This Calculator Works
A merchant cash advance does not have an interest rate — it has a factor rate. The factor rate tells you the total dollar cost but not the annualised cost you’d use to compare against other financing. This calculator converts your factor rate into an effective APR so you can compare apples to apples.
The key formula:
Effective APR = (Total Cost ÷ Advance Amount) ÷ (Repayment Days ÷ 365) × 100
Example:
- Advance: $60,000 at 1.30 factor rate
- Total repayment: $78,000
- Total cost: $18,000
- Holdback: 15% of $3,500/day = $525/day collected
- Repayment days: $78,000 ÷ $525 = 149 days
- Effective APR: ($18,000 ÷ $60,000) ÷ (149 ÷ 365) × 100 = 73.6%
The same advance with $6,000/day in card sales repays in 87 days at 126% effective APR — the dollar cost is identical, but faster repayment pushes the annualised rate higher.
Why Effective APR Matters
MCA providers quote factor rates — not APRs — because factor rates make the product appear less expensive than it is. A 1.30 factor rate sounds modest; a 73–130% effective APR does not. Both describe the same product.
The APR matters because it lets you compare the MCA against:
- A business line of credit (8–30% APR)
- Invoice factoring (18–60% effective APR)
- An SBA loan (10–13% APR)
- A conventional term loan (15–40% APR)
In most cases, an MCA is the most expensive option available. The calculator makes that comparison concrete.
Factor Rate to APR Reference Table
Common factor rates converted to effective APR across different repayment speeds:
| Factor Rate | Total Cost on $100K | 60-day repayment APR | 90-day APR | 120-day APR | 180-day APR |
|---|---|---|---|---|---|
| 1.10 | $10,000 | 61% | 41% | 30% | 20% |
| 1.15 | $15,000 | 91% | 61% | 46% | 30% |
| 1.20 | $20,000 | 122% | 81% | 61% | 41% |
| 1.25 | $25,000 | 152% | 101% | 76% | 51% |
| 1.30 | $30,000 | 183% | 122% | 91% | 61% |
| 1.35 | $35,000 | 213% | 142% | 106% | 71% |
| 1.40 | $40,000 | 243% | 162% | 122% | 81% |
| 1.49 | $49,000 | 299% | 199% | 149% | 100% |
APRs are approximations. Your actual effective APR depends on your specific holdback percentage and daily card sales volume.
Understanding Holdback Percentage
The holdback (also called retrieval rate) is the percentage of your daily credit and debit card sales the MCA provider collects each business day.
- 10% holdback on $5,000/day = $500/day collected
- 20% holdback on $5,000/day = $1,000/day collected
A higher holdback means faster repayment and a higher effective APR (same dollar cost, fewer days). A lower holdback means slower repayment and a lower effective APR. The total dollar cost does not change.
This is why MCAs advertise “flexible repayment” — on slow sales days, less is collected. But the total owed never decreases. You’ll eventually repay the full amount regardless of how long it takes.
Red Flags in MCA Agreements
Before signing any MCA, check for:
Fixed daily ACH (not holdback): Some MCAs collect a fixed dollar amount daily regardless of your sales — eliminating the “flexibility” that distinguishes an MCA from a term loan. If your agreement specifies a fixed daily debit rather than a percentage of card sales, it is not a true holdback MCA.
Confession of judgment: A legal clause allowing the provider to obtain a court judgment against you without notice. Banned in some states; still present in agreements elsewhere. Do not sign any MCA with this clause.
Stacking prohibition: Most agreements prohibit taking additional MCAs without consent. Violating this triggers default.
Default on sales decline: Some agreements treat a significant drop in sales volume as a default event — even if you’re not behind on payments. Read this section of your agreement carefully.
Frequently Asked Questions
What is a “good” factor rate for an MCA? There is no universally good factor rate — it depends on how quickly you repay. A 1.15 factor rate over 60 days is ~91% effective APR. A 1.15 over 180 days is ~30% effective APR. The only way to evaluate a factor rate is to know your average daily card sales, calculate your expected repayment timeline, and convert to APR for comparison. Use the calculator above.
Can I use this calculator for a fixed daily ACH MCA? Partially. If your MCA has fixed daily ACH (not holdback), enter your fixed daily payment amount as if it were holdback: Daily ACH ÷ your average daily card sales = effective holdback %. This gives you an approximation, but note that fixed daily ACH doesn’t flex with revenue, making it higher-risk than a true holdback MCA.
Why do my daily card sales affect the effective APR but not the total cost? Total cost = Advance Amount × (Factor Rate − 1). This is fixed the moment you sign. Daily card sales determine how quickly you repay — faster repayment means fewer days over which you spread the cost, pushing the annualised (APR) rate higher. If you expect very high card sales, model the faster repayment scenario to see your true effective APR.
Is there an early payment discount available? Some MCA providers offer a prepayment discount — a reduced total owed if you settle early. This is not standard across all providers and is not published in most agreements. Ask specifically whether your provider offers a prepayment discount before signing, and get any such offer in writing.
How do I calculate the effective APR for multiple MCAs stacked together? Run each MCA through this calculator separately, then add the daily holdback amounts across all MCAs. The combined holdback from multiple MCAs can represent 30–50% of daily card sales for some businesses. Stacking is generally inadvisable — see MCA guide for stacking risks.
This APR looks very high. Is the calculator wrong? The calculator is correct. MCAs are genuinely expensive products when measured on an annualised basis. A 1.25 factor rate repaid over 90 days is approximately 101% effective APR. This is accurate — and it is why regulators in California, New York, Utah, and Virginia now require MCA providers to disclose effective APR before signing. The calculator is giving you the same number those states require providers to disclose.