Payment Load Ratio: Meaning in a Merchant Cash Advance
Payment load ratio is the share of a business's monthly revenue already committed to advance and loan payments. Funders calculate it by adding every open daily or weekly debit, converting to a monthly total and dividing by true revenue.
What does payment load ratio mean?
If your monthly revenue is one hundred units and your advances and loans take twenty of them, your payment load is twenty percent. Every new advance adds to it. There is no single universal limit, but each funder has a point where it decides the account can't carry more, and many look closely once existing debits take a large share of deposits.
Why does payment load ratio matter to your business?
This number drives whether a second or third advance makes sense at all. A higher load means less cash left for payroll, rent and inventory. When the ratio is already heavy, funders either decline, offer smaller amounts or suggest consolidation. It's also the clearest way for you to judge whether another advance helps or just adds strain.
How do you work out the ratio?
- List every advance and loan payment and whether it's daily or weekly.
- Convert each to a monthly amount using the number of business days or weeks.
- Add them up and divide by average monthly true revenue.
How do you use it to decide?
If the ratio is already high, a consolidation or a smaller add-on often does more good than a new position. Run the numbers before you ask for more.
Where will you see it?
In underwriting notes for any file with open positions. In a broker's summary of your file. In our stacked payment calculator, which runs the same math on your own numbers.
Which terms are related to payment load ratio?
The full list is in the glossary. Owners ask about this in Do funders look at profit or revenue for an MCA?.
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.