Merchant Cash Advance Calculator
A merchant cash advance has no interest rate — it has a factor rate and a holdback. Enter both, along with your card sales, to see your total payback, your daily or weekly remittance, how long repayment takes, and what the whole arrangement works out to as an annualized rate.
Remittance schedule (by month)
An advance has no amortization schedule, because nothing amortizes. What it has is a fixed payback figure that gets drawn down by a percentage of your card sales. This table shows how that balance falls month by month at the sales volume you entered.
| Month | Remitted this month | Cumulative remitted | Remaining payback |
|---|
How the merchant cash advance calculator works
Most financing calculators start from an interest rate. This one cannot, because a merchant cash advance does not have one. An advance is legally structured as a purchase of future receivables, not a loan, and its price is quoted as a factor rate — a flat multiplier applied to the amount you receive:
Cost of capital = Total payback − Advance
Daily remittance = (Monthly card sales ÷ 21) × Holdback %
Payback period (days) = Total payback ÷ Daily remittance
The multiplication happens once, at signing. A $50,000 advance at a 1.30 factor rate means $65,000 is owed from day one. That $65,000 does not grow, and under a standard contract it does not shrink if you finish quickly either. There is no balance accruing interest, which is exactly why the usual amortization math does not apply here.
What the holdback actually controls
The second number in every advance is the holdback, sometimes called the retrieval rate: the share of each day's card settlement that gets swept to the funder before it reaches your account. At a 12% holdback, a day with $2,857 in card sales sends about $343 onward and leaves you the rest.
The holdback does not change what you owe. It only changes how fast you get there. A higher holdback compresses the timeline; a lower one stretches it. This is the mechanical fact that makes an advance behave so differently from a loan: on a loan, paying faster saves interest. On an advance, paying faster saves nothing — the same fixed cost is simply compressed into fewer days, which drives the annualized rate up rather than down.
The flip side is the feature funders emphasize, and it is real: because remittance floats with sales, a slow month automatically remits less. Your payment adapts to your revenue instead of arriving as a fixed debit regardless of how the month went.
Two ways to annualize the cost, and why they disagree
Since there is no stated rate, an APR has to be reverse-engineered from the cash flows — and the method you pick changes the answer substantially.
The simple method takes the cost as a fraction of the advance and spreads it across the payback period: 30% of the advance, repaid over roughly 0.75 years, annualizes to about 40%. It is easy to compute and it is what most quick estimates use.
It is also too low, for a specific reason. It assumes you have the full $50,000 in hand for the entire term. You do not. Remittance starts the next business day and never stops, so your average outstanding balance across the period is closer to half the advance. You are paying the full fixed cost while actually using, on average, about half the money.
The IRR method handles this correctly. It treats your remittances as a level payment stream and solves for the periodic rate that makes the present value of that stream equal what you actually received. This calculator finds that rate by bisection and annualizes it, which is why the headline figure runs close to double the simple one on typical inputs. It is the same discipline the Truth in Lending Act imposes on consumer credit — a regime that does not reach an advance to a business, because TILA applies only to credit extended for personal, family, or household purposes. Several states have since enacted their own commercial financing disclosure rules; whether one applies to a given contract is a question for a qualified professional.
Reading the numbers
The APR shown here is a computed consequence of three inputs and nothing more. Raise the factor rate and it rises. Raise the holdback and the timeline shortens, which also raises it. Enter weaker card sales and the payback period stretches, which lowers it. That last relationship surprises people: the identical contract produces a materially different APR depending on how the business actually performs, which is why an advance cannot be quoted with a rate up front.
Two things this calculator cannot know. First, contracts vary — some carry origination or underwriting fees deducted at funding, which reduce what you actually receive and push the real APR above what is shown. Second, holdback is often applied per settlement batch rather than per calendar day, and business-day counts vary by month, so treat the payback period as an estimate rather than a date. Read the actual agreement for the reconciliation clause, any fees taken at funding, and whether early payoff carries a discount, since a minority of contracts do offer one.
Comparing an advance to a term loan means comparing the APR here against the APR there, on the same basis. The APR calculator produces that figure for conventional financing, and the factor rate calculator converts between factor rates and percentage costs directly.
Frequently asked questions
How is a merchant cash advance different from a loan?
A loan amortizes: you owe a principal balance, interest accrues on it each period, and the balance falls as you pay. A merchant cash advance does none of that. It is structured as the purchase of a fixed slice of your future card receipts. The total you owe is set the moment you sign, as advance times factor rate, and it never changes. You then hand over a percentage of each day's card sales until that fixed number is reached. There is no interest accruing, no principal balance in the lending sense, and no benefit to finishing early unless the contract specifically grants one.
What does a 1.30 factor rate actually cost?
It means you repay 1.30 dollars for every 1.00 dollar advanced. On a 50,000 dollar advance the total payback is 65,000 dollars and the cost of capital is 15,000 dollars, or 30 percent of the amount advanced. That 30 percent is not an annual figure. It is the entire cost, and the shorter the payback period, the higher the annualized equivalent of that same 30 percent.
How is the APR on a merchant cash advance calculated?
An advance has no stated rate, so an APR has to be inferred from the cash flows. This page uses two methods. The simple method divides the cost of capital by the advance, then divides by the payback period in years. The IRR method treats your remittances as a level payment stream and solves for the periodic rate that makes the present value of those payments equal the amount you received, then annualizes it. The IRR figure is the more accurate one because it accounts for the fact that you start repaying immediately.
Why do the two APR figures on this page differ?
The simple method assumes you hold the full advance for the whole term, which is not what happens. You begin remitting the day after funding, so your average outstanding balance is roughly half the advance, not all of it. Paying the same fixed cost while using far less money on average makes the true annualized rate roughly double the simple figure. That is why the IRR number is shown as the headline.
What happens if my card sales drop?
Because remittance is a percentage of sales rather than a fixed amount, a slow month automatically sends less money to the funder. The total payback does not shrink, so the payback period simply stretches out. This lowers the effective APR, since the same fixed cost is spread over more time. The reverse is also true: a strong sales month finishes the advance sooner and raises the effective APR. Lower the card sales input to see how the timeline and APR respond.
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This calculator is for educational and informational purposes only and does not constitute financial, legal, tax, or lending advice. Estimates are based on the values you enter and standard financial formulas. Confirm all figures with a qualified professional before making decisions.