Merchant cash advance calculator

What a merchant cash advance is

A merchant cash advance (MCA) gives a business a lump sum in exchange for a fixed percentage of its future card sales until an agreed total is repaid. It is popular with retail, hospitality and other card-heavy trades because repayments flex with takings — you pay more on busy days and less on quiet ones.

The catch is that MCAs are not priced as an interest rate. They use a factor rate, a multiplier applied to the advance. A factor rate of 1.4 on £10,000 means you repay £14,000 regardless of how quickly you clear it. This calculator converts that multiplier into a total cost and, crucially, an equivalent APR so you can see what you are really paying.

How to use it

Enter four inputs:

• Advance amount — the lump sum you receive.
• Factor rate — the multiplier, typically between 1.1 and 1.5.
• Holdback percentage — the share of each day's card takings the provider keeps, often 10–20%.
• Average monthly card turnover — used to estimate how long repayment takes.

The calculator returns the total repayable, the cost of the advance in pounds, an estimate of how many months it will take to clear at your turnover, and the equivalent APR. Try raising and lowering monthly turnover: because the total repayable is fixed, paying it off faster does not save you money, but it sharply increases the effective APR — a quirk that surprises many directors.

The formula in plain English

Total repayable = advance amount × factor rate. That figure never changes once agreed.

Cost of the advance = total repayable − advance amount.

Estimated repayment period = total repayable ÷ (monthly card turnover × holdback %). This tells you roughly how many months of takings it takes to satisfy the balance.

The equivalent APR annualises the cost over that estimated period. Because MCAs are typically repaid in months, not years, a modest-looking factor rate can translate into a high APR — which is exactly why comparing on factor rate alone is misleading.

Worked example

Suppose a café takes a £15,000 advance (illustrative figures, not Credicorp rates).

Item	Figure
Advance	£15,000
Factor rate 1.35	Total repayable £20,250
Cost	£5,250
Monthly card turnover	£30,000
Holdback 15%	£4,500 collected a month
Estimated time to clear	≈ 4.5 months

The £5,250 cost over roughly four and a half months equates to an APR well into the high double digits — far higher than the 35% the factor rate might suggest at a glance. Repaying in three months instead would push the APR higher still, because you would pay the same £5,250 in less time.

How to read the result, and its limits

Focus on two figures: the cost in pounds and the equivalent APR. The pound cost tells you the absolute price; the APR lets you compare an MCA fairly against a term loan or facility, which you can model on our repayment calculator or side by side on the loan comparison calculator.

The estimate is simplified. It ignores set-up or admin fees, assumes a steady holdback against steady turnover, and does not account for renewals or top-ups taken before the first advance is cleared — a pattern that can stack cost on cost. If your takings are seasonal, model a realistic average rather than your best month, and sanity-check the cash-flow impact with our seasonal cash buffer calculator. Educational only, not financial advice.