Merchant cash advance calculator: how to estimate your costs
By Helm, Funding Specialists
- MCA cost = advance amount x factor rate. A £15,000 advance at 1.3x costs £19,500 total.
- The repayment timeline depends on your card sales volume and the agreed repayment percentage.
- Daily repayment = daily card sales x repayment percentage.
- Unlike loans, the total cost does not increase if repayment takes longer.
Before taking out a merchant cash advance, you want to know exactly what it will cost and how long repayment will take. While most providers will give you a personalised quote, understanding the calculation yourself puts you in a stronger position.
This guide breaks down the formula, walks through worked examples, and explains how different variables affect your total cost and repayment timeline.
The basic formula
Calculating the cost of a merchant cash advance is straightforward. You multiply the advance amount by the factor rate.
Total repayable = advance amount x factor rate.
For example, a £15,000 advance with a factor rate of 1.3 means you repay £19,500 in total. The cost of funding is £4,500.
Worked examples
Here are several scenarios showing how the numbers work at different advance amounts and factor rates.
| Advance | Factor Rate | Total Repayable | Cost of Funding |
|---|---|---|---|
| £10,000 | 1.20 | £12,000 | £2,000 |
| £15,000 | 1.30 | £19,500 | £4,500 |
| £25,000 | 1.25 | £31,250 | £6,250 |
| £50,000 | 1.35 | £67,500 | £17,500 |
| £100,000 | 1.20 | £120,000 | £20,000 |
Estimating your repayment timeline
The time it takes to repay depends on two factors: your daily card sales and the repayment percentage. Here is the formula:
Estimated repayment period = total repayable / (average daily card sales x repayment percentage).
For example, if you owe £19,500 total, take an average of £800 per day in card sales, and your repayment rate is 15%, your daily repayment is £120. At that rate, repayment would take approximately 163 business days, or around 7 to 8 months.
How the repayment percentage affects your timeline
The repayment percentage directly affects how quickly you clear the advance and how much of your daily revenue you retain.
| Daily Card Sales | Repayment % | Daily Repayment | Time to Repay £19,500 |
|---|---|---|---|
| £800 | 10% | £80 | ~244 days (10-11 months) |
| £800 | 15% | £120 | ~163 days (7-8 months) |
| £800 | 20% | £160 | ~122 days (5-6 months) |
| £1,200 | 15% | £180 | ~108 days (4-5 months) |
Why the total cost stays the same
One of the most important things to understand about MCA pricing is that the total cost is fixed. Whether you repay in four months or twelve months, the total amount does not change.
This is fundamentally different from a loan with an interest rate, where the total cost increases the longer you take to repay. With an MCA, a slower repayment period does not penalise you.
Factors that affect your factor rate
Your factor rate is determined by the provider based on a risk assessment. The main factors that influence it include:
- Your monthly card turnover, higher turnover typically means lower rates
- How long you have been trading
- Your industry and associated risk profile
- The size of the advance relative to your monthly revenue
- Whether you have successfully repaid previous advances
Tips for getting the best rate
While you cannot directly negotiate factor rates in the same way as loan interest, there are things you can do to position your business for a better offer:
- Apply when your card sales are at their strongest to demonstrate high turnover
- Maintain consistent card transaction volumes over several months
- Start with a smaller advance and build a repayment track record
- Provide complete and accurate information in your application
- Choose a provider with transparent pricing and no hidden fees
Frequently asked questions
How do I calculate the cost of a merchant cash advance?
Multiply the advance amount by the factor rate. For example, a £20,000 advance at a factor rate of 1.25 means you repay £25,000 total. The cost of funding is £10,000.
Is there a free MCA calculator I can use?
Many providers offer online calculators on their websites. However, the calculation is simple enough to do yourself: advance amount multiplied by factor rate equals total repayable.
What is a typical repayment percentage?
Repayment percentages typically range from 10% to 25% of daily card sales. The exact percentage depends on your card turnover, the advance amount, and the provider.
Does the cost increase if I repay slowly?
No. The total amount repayable is fixed from the start. Slower repayment does not increase the cost. This is one of the key advantages of an MCA compared to interest-bearing finance.