A merchant cash advance priced at a 1.35 factor rate on $50,000 costs $17,500 in fees, for a total payback of $67,500 — and the shorter the repayment window, the higher the true annual cost of that same fixed fee. Unlike a term loan quoted in APR, an MCA multiplies the amount advanced by a factor rate (typically 1.10 to 1.50) to set a flat total you repay, usually through a fixed daily or weekly debit tied to your sales. This page walks through real cost examples across common advance sizes so you can see exactly what you would pay back in dollars, what the daily debit looks like, and how the timeline turns a modest-looking factor rate into a much larger effective APR.
Key takeaways
- MCA cost = amount advanced x factor rate; the fee is flat and set at signing, not accruing interest.
- Factor rates typically run 1.10 to 1.50 based on revenue, deposits, time in business and industry risk.
- A $50,000 advance at 1.35 costs $17,500 in fees for $67,500 total payback.
- At a 1.30 factor, cost of capital is always 30 cents per dollar advanced, regardless of size.
- Advances often start at $10,000 and scale with monthly bank deposits.
- Revenue-based approval can work with FICO 500+ because it leans on sales, not credit alone.
- Funding commonly arrives same day to within 48 hours after statements are reviewed.
- A factor rate is not an APR — the same 1.30 factor can imply ~30% APR over 12 months or ~55%+ over 6 months.
- Paying early rarely reduces the flat fee, so a shorter term raises the effective APR for the same cost.
How MCA cost is actually calculated
A merchant cash advance is not a loan and does not use interest that accrues over time. Instead, the funder buys a slice of your future revenue at a discount. Two numbers set the price:
- Amount advanced — the cash you receive, often from $10,000 and up.
- Factor rate — a decimal multiplier, commonly 1.10 to 1.50, based on your monthly revenue, deposit consistency, time in business and industry risk. Revenue-based products can approve applicants with FICO scores as low as 500 because approval leans on sales and bank deposits, not just credit.
The math is simple and fixed at signing:
- Total payback = Amount advanced x Factor rate
- Total cost of capital = Total payback − Amount advanced
Example: $30,000 x 1.30 = $39,000 owed, so the cost of capital is $9,000. That $9,000 does not shrink if you repay early, because it is a flat fee, not accruing interest. This is the single most important thing to understand about MCA cost.
Cost examples by advance size (factor rate 1.30)
The table below holds the factor rate steady at 1.30 so you can see how the flat fee scales with the amount advanced. All figures are illustrative.
| Amount advanced | Factor rate | Total payback | Cost of capital |
|---|---|---|---|
| $10,000 | 1.30 | $13,000 | $3,000 |
| $25,000 | 1.30 | $32,500 | $7,500 |
| $50,000 | 1.30 | $65,000 | $15,000 |
| $75,000 | 1.30 | $97,500 | $22,500 |
| $100,000 | 1.30 | $130,000 | $30,000 |
The cost of capital is always 30 cents on every dollar advanced at a 1.30 factor. To keep the price down, the levers are a lower factor rate and taking only the capital you truly need.
How the factor rate changes the price
Small movements in the factor rate move real dollars. Here is the same $50,000 advance at different factor rates:
| Amount | Factor rate | Total payback | Cost of capital |
|---|---|---|---|
| $50,000 | 1.15 | $57,500 | $7,500 |
| $50,000 | 1.25 | $62,500 | $12,500 |
| $50,000 | 1.35 | $67,500 | $17,500 |
| $50,000 | 1.45 | $72,500 | $22,500 |
The gap between a 1.15 and a 1.45 factor on the same $50,000 is $15,000 — the difference between a stronger and a weaker file. Stronger monthly revenue, clean bank deposits, longer time in business and no recent negative days typically earn a lower factor.
Daily payments and repayment timeline
MCAs are usually repaid through a fixed daily debit on business banking days (roughly 21–22 per month) or a weekly debit. The total payback is divided across the estimated term. Using a $50,000 advance at a 1.40 factor ($70,000 total payback):
| Estimated term | Business days (approx.) | Daily payment |
|---|---|---|
| 6 months | ~130 | ~$538 |
| 9 months | ~195 | ~$359 |
| 12 months | ~260 | ~$269 |
Funding is fast — many revenue-based advances fund the same day to within 48 hours once bank statements are reviewed. Note that a shorter term means a larger daily debit and greater strain on cash flow, even though the total fee is identical. If the daily payment is squeezing operations, some businesses use a reverse consolidation to lower the daily payment and free up cash flow — a cash-flow tool, not a way to pay off your advances or buy them out.
Why factor rate and APR are not the same
A 1.30 factor rate is not a 30% APR. APR annualizes cost over time, so the repayment window dramatically changes the effective APR of the very same fee. Consider a $25,000 advance at a 1.30 factor ($7,500 fee) repaid over different terms:
| Amount | Factor | Fee | Term | Approx. effective APR |
|---|---|---|---|---|
| $25,000 | 1.30 | $7,500 | 6 months | ~55–60% |
| $25,000 | 1.30 | $7,500 | 9 months | ~38–42% |
| $25,000 | 1.30 | $7,500 | 12 months | ~28–32% |
The APR ranges are approximate because daily amortization and holidays affect the exact figure. The takeaway is consistent: the faster you repay a flat-fee advance, the higher the effective APR, since you are paying the same fee over less time. This is why comparing an MCA to an APR-quoted term loan requires converting the factor rate to an estimated APR for the actual expected term.
Frequently asked questions
What is a typical MCA factor rate?
Factor rates commonly range from about 1.10 to 1.50. Your specific rate depends on monthly revenue, deposit consistency, time in business, industry and overall risk. Stronger files earn lower factors, which directly lowers the flat fee you repay.
Does repaying an MCA early save me money?
Usually not on the fee itself. Because the cost is a flat amount set at signing (amount x factor rate), the total owed generally does not shrink if you pay early. Some funders offer discounts for early payoff, but you should confirm that in writing before assuming savings.
How is total MCA payback calculated?
Multiply the amount advanced by the factor rate. For example, $40,000 at a 1.25 factor equals $50,000 total payback, meaning $10,000 is the cost of capital. That total is then divided across your estimated term as a daily or weekly debit.
Why is the effective APR so much higher than the factor rate?
APR measures cost over time, while a factor rate is a flat multiplier. A 1.30 factor repaid in 6 months carries a far higher effective APR than the same 1.30 factor repaid over 12 months, because you pay the identical fee across a shorter window.
How much can I get and how fast?
Revenue-based advances often start around $10,000 and scale with your monthly deposits. Approval leans on sales and bank statements rather than credit alone, so applicants with FICO scores near 500 may still qualify, and funding commonly lands the same day to within 48 hours.
What is the daily payment on an MCA?
Divide total payback by the estimated number of business days in the term. A $50,000 advance at a 1.40 factor ($70,000 payback) over roughly 12 months of business days is about $269 per day. Shorter terms mean larger daily debits for the same total fee.
What if the daily payments are straining my cash flow?
One option is a reverse consolidation, which restructures how much comes out each day to lower the daily payment and ease cash flow. It is a cash-flow management tool, not a buyout — it does not pay off your advances, and you should review the full terms before deciding.
