Question 1

How much does a merchant cash advance cost?

Accepted Answer

The cost is the gap between the total you pay back and the cash that actually lands in your account. Multiply the advance by the factor rate to get the payback, take any fees off the advance to get your cash, and subtract. Compare that dollar gap across offers, along with how fast it's paid, since a short payback costs more per year.

Question 2

What is a factor rate?

Accepted Answer

A factor rate is a multiplier that sets your total payback. A factor of 1.3 on a $10,000 advance means you pay back $13,000. It's fixed when you sign, so it doesn't shrink if you pay sooner unless the contract has an early payoff discount. The factor alone doesn't tell you the whole cost, because fees and speed matter too.

Question 3

What is a good factor rate for an MCA?

Accepted Answer

There's no single good number, because the right price depends on your file, the term and the funder. A better test is dollars: how much the advance costs, how much cash you actually get, and how fast you pay it back. The best offer is the one with the lowest cost you can carry, compared side by side with other real offers on your file.

Question 4

Is a factor rate the same as an APR?

Accepted Answer

No. A factor rate is a flat multiplier on the advance, and an APR spreads the cost over a year. The same factor gives a much higher APR on a short payback than on a long one, because you pay the same dollars in less time. Look at both numbers, and at the dollar cost, when you compare offers.

Question 5

How do I estimate the APR on an MCA?

Accepted Answer

Take the cost in dollars, divide it by the cash you actually received, then scale that to a year using the expected payback time. A shorter payback means a higher APR on the same dollars. It's an estimate, since the real payback time can move with your sales. The factor rate calculator does the math for you.

Question 6

What fees can come with an MCA?

Accepted Answer

Common fees are an origination or underwriting fee and a bank or ACH fee, and some contracts add fees for bounced payments or a default. Most come out before the money reaches you, so ask for the net amount that will land in your account. You never pay us a fee; the funder pays our commission only when a deal funds.

Question 7

What is net funding?

Accepted Answer

Net funding is the cash that actually reaches your bank after fees and any payoff of an old advance. It's often less than the advance amount printed on the contract, sometimes a lot less on a renewal or a consolidation. Always compare offers on net funding and total payback, because that's the real trade you're making.

Question 8

Do I save money by paying an MCA off early?

Accepted Answer

Only if your contract has an early payoff discount. Many MCAs charge the full payback no matter when you finish, because the funder bought a fixed amount of your future sales. Some offer a discount if you pay off within a set window. If early payoff matters to you, get the discount schedule in writing before you sign.

Question 9

Why do MCAs cost more than a bank loan?

Accepted Answer

The funder takes more risk. There's often no collateral, no bank-style credit minimum, and repayment depends on your future sales. The short term raises the yearly cost too, because the funder earns its return in months, not years. Speed and light paperwork are what you're paying for, so make sure you really need them.

Question 10

Can I negotiate the price of an MCA?

Accepted Answer

Often, yes. Competing offers, clean statements, a smaller amount or a weekly schedule can move the factor rate, the fee or the term. Having more than one offer in the same format makes that conversation easier, and shopping your file with several funders whose programs fit is a big part of what we do.

Question 11

Does using a broker make my advance cost more?

Accepted Answer

With us, you pay nothing directly. Applying is free, and you never pay us a fee. The funder pays our commission only if a deal funds, and the amount is in the offer paperwork before you sign. Judge any broker by the written offer terms you can see and compare, not by promises made on the phone.

Merchant Cash Advance Cost FAQ

Cost and pricing