Estimated APR: Meaning in a Merchant Cash Advance
An estimated APR is the advance's cost expressed as a yearly rate, based on how long the funder expects repayment to take. It lets you compare an advance with a loan or card. California and New York require it on disclosures for covered sales-based financing. Because the real term depends on your sales, it's an estimate, and a slower payoff lowers it.
Where does it show up?
On the California and New York disclosure forms, near the top with the finance charge. Each state sets how the estimate is made.
Which law requires an estimated APR?
See 10 CCR § 940 and 23 NYCRR Part 600.
What does it look like in practice?
$40,000 received, $52,000 paid back in about 26 weekly payments. The factor is 1.30, but the estimated APR is far higher because the term is half a year. Try it in the APR calculator.
Which owner question goes with this term?
What is a good factor rate for an MCA? Answers to the questions owners ask about this term, with what to ask the funder.
A term on your offer you don't recognize?
Send us the line and we'll tell you what it means. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.