This factor rate calculator from Ivyview Lenders, a small-business funding broker in Greenville, North Carolina, multiplies a merchant cash advance by its factor rate to give the total payback and dollar cost, and estimates remittance time from a holdback or fixed debit. A merchant cash advance is not a loan, and the results are illustrative arithmetic, not an offer.
What a factor rate is
A factor rate is the multiplier a funder applies once, at signing, to set the total it will collect. It is written as a decimal, and the part above 1 is the cost per dollar advanced. A merchant cash advance is not a loan; the funder is buying future receivables. So its factor rate isn't an interest rate, and the total it produces doesn't grow or shrink with time.
- Total payback = advance amount × factor rate
- Dollar cost = total payback − advance amount
- Daily remittance = average daily card sales × holdback % ÷ 100
- Business days to finish = total payback ÷ daily remittance, rounded up
Working the factor rate out from an offer
Some offers state the amount funded and the total to be collected (sometimes called the purchased amount) but put the factor rate in small print or leave it out. You can recover it:
- Factor rate = total payback ÷ advance amount
- Cost per dollar = factor rate − 1
If fees are deducted before the money reaches you, run the same division using the net amount you actually receive. The result is higher, and it's the truer measure of what each dollar in your account costs.
Which number goes in which box
| Box | Where to find it | Watch for |
|---|---|---|
| Advance amount | The purchase price or amount funded in the agreement | Fees deducted from it, which mean you receive less |
| Factor rate | The offer or agreement, or worked out as above | A figure stated as a percentage instead of a decimal |
| Holdback | The specified percentage in the agreement | Agreements that debit a fixed amount instead |
| Average daily card sales | Your processor statements: monthly card volume ÷ days with sales | Seasonal months that pull the average up or down |
If the offer uses a fixed daily or weekly debit
Many advances are collected as a fixed debit from the bank account rather than a share of each card settlement. The calculator can still estimate the time: enter 100 as the holdback and the debit amount as the average daily card sales. The time result then equals total payback divided by the debit. For a weekly debit, read the result as weeks rather than business days.
What the result leaves out
- Fees deducted from the advance or charged during remittance
- How sales actually move. With a percentage holdback, stronger sales finish remittance sooner at the same total, which raises the cost per day; weaker sales stretch it out
- Early-payoff terms, which only matter if the agreement offers a discount
- Any second advance, whose debits would stack on top of these
You won't get an APR from this page. Turning a factor rate into a yearly figure requires assuming how long remittance lasts, so the result would only ever be an approximation.
Before you accept an advance
Compare the total payback and estimated period with a loan option over a similar period, using the loan payment calculator. Read how an MCA compares with a line of credit, see how merchant cash advances work and review our disclosures. Have your attorney read the agreement, including any personal guarantee, UCC filing and default terms.
By Ivyview Lenders · Updated