Merchant Cash Advance Cost Calculator
A factor rate is not an interest rate.
Merchant cash advances are quoted as factor rates rather than interest, which makes them look cheaper than they are. The annualised figure below is what the same money would cost as a loan.
Effective annualised cost
146%
$15,000 to borrow $50,000
A factor rate of 1.30 sounds like 30%. Repaid over 150 days it is roughly 146% annualised, because the principal amortises while the fee does not. That can still be the right decision when speed matters — it is rarely the right decision when it does not.
How the Merchant Cash Advance Cost Calculator works
A factor rate of 1.3 sounds like 30% interest. Repaid over six months through a daily holdback it is several times that annualised, because the principal amortises while the fee does not. That can still be the right decision when speed matters and is rarely right when it does not.
Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price — check the platform's current fee schedule before you price a product against it. This is not tax or business advice.
Frequently asked questions
What is a factor rate?
A multiplier on the advance rather than an interest rate. A 1.3 factor on £50,000 means repaying £65,000, regardless of how quickly you repay it.
Why does the annualised cost look so much higher?
Because the fee is fixed and the balance falls as you repay. Paying a fixed £15,000 fee over six months on a declining balance is equivalent to a very high annual rate.
When does an advance make sense?
When speed or a lack of alternatives makes it the only option, and the use of funds returns more than the cost. Buying stock for a known selling season can clear that bar; covering a shortfall usually cannot.
What is the daily holdback?
A percentage of daily card takings automatically diverted to repayment. It flexes with sales, which is the genuine advantage — repayment slows in a bad month.