About this calculator
The Merchant Cash Advance Calculator helps UK businesses estimate MCA cost from the advance amount, factor rate, holdback percentage, and monthly card sales. It is designed for businesses with debit and credit card takings, such as shops, restaurants, cafes, salons, clinics, trades, and online sellers, that need to compare fast funding with the true cost and daily cash-flow impact. The key outputs are total repayable, fixed fee, estimated repayment time, daily repayment, and an APR-style comparison.
Merchant cash advance calculation method
The calculator multiplies the advance by the factor rate to estimate total repayable. It estimates repayment speed from average card sales and the holdback percentage. The APR-style figure annualises the fixed fee over the estimated repayment period, so it is useful for comparison but may not match a regulated loan APR.
- total repayable = advance amount x factor rate
- fixed cost = total repayable - advance amount
- daily card sales = monthly card sales / 30
- daily repayment = daily card sales x holdback percentage
- repayment days = total repayable / daily repayment
- APR-style estimate = fixed cost / advance amount / repayment years
How to use the MCA calculator
- Enter the amount of cash the business would receive upfront.
- Enter the quoted factor rate, such as 1.20, 1.30, or 1.40.
- Enter the holdback percentage taken from card takings.
- Enter average monthly card sales from merchant statements.
- Review total repayable and fixed cost.
- Check the estimated repayment period and daily repayment.
- Compare the MCA with a business loan, invoice finance, or waiting until cash flow improves.
Worked examples
Factor rate and holdback example
Input: GBP 25,000 advance, 1.30 factor rate, 10% holdback, GBP 35,000 monthly card sales
Calculation: Total repayable is GBP 32,500. Estimated daily repayment is about GBP 117.
Result: Repayment takes about 278 days, and the fixed cost is GBP 7,500 before any other fees.
Seasonal business stress test
Input: GBP 20,000 advance, 1.25 factor rate, 15% holdback, card sales fall from GBP 30,000 to GBP 18,000
Calculation: The daily repayment falls with card sales, but repayment takes longer.
Result: Cash flow may feel easier in slow months, but the funding remains outstanding for longer.
Fast repayment with high sales
Input: GBP 10,000 advance, 1.40 factor rate, 20% holdback, GBP 50,000 monthly card sales
Calculation: Total repayable is GBP 14,000 and daily repayment is about GBP 333.
Result: The advance may clear quickly, but the APR-style cost can look very high because the fixed fee is repaid over a short period.
What factor rate and holdback mean
The British Business Bank describes a merchant cash advance as short-term funding for businesses that accept card payments, repaid from a percentage of card transaction sales plus fees. The factor rate is the multiplier used to calculate total repayable, while the holdback is the share of card sales deducted toward repayment.
A factor rate is not the same as APR. A 1.30 factor rate means total repayable is 1.30 times the advance. If the advance is repaid quickly, the annualised cost can be much higher than the headline factor-rate percentage suggests.
Inputs to stress test
| Input | Why it matters | Stress test |
|---|---|---|
| Factor rate | Sets total repayable | Compare 1.20, 1.30, and 1.40 |
| Holdback percentage | Controls daily card-sales deduction | Test whether cash flow survives 10%, 15%, and 20% |
| Monthly card sales | Controls repayment speed | Use average, low-season, and high-season sales |
| Advance amount | Sets cash received and total cost | Borrow only what the opportunity needs |
| Other fees | Can change true cost | Check broker, setup, admin, and early-settlement terms |
When an MCA may be risky
- Low-margin sales
- If the profit margin on card sales is thin, the holdback can remove cash needed for wages, rent, suppliers, or tax bills.
- Seasonal trading
- Repayments flex with card sales, but slow months can extend the arrangement. Model a low-sales month before accepting funding.
- Fixed total repayable
- Some arrangements do not become cheaper just because you repay faster. Read the agreement carefully.
Common mistakes
- Do not compare a factor rate directly with APR.
- Do not assume early repayment reduces the fixed fee.
- Do not use total sales if only card sales count toward repayment.
- Do not ignore slow-season months when estimating repayment time.
- Do not forget other fees, broker costs, minimum payments, or contract restrictions.
Financial information disclaimer
This calculator is for general business finance education only and is not financial advice. MCA agreements vary, and APR-style estimates may not match regulated loan APR calculations. Read the agreement and consider qualified advice before accepting funding.
- It assumes sales and holdback behave as entered.
- It does not assess eligibility or suitability.
- It does not model every contract fee or penalty.
Frequently asked questions
What is a merchant cash advance?
It is short-term business funding repaid from a percentage of card sales, usually with fees expressed through a factor rate.
What does a factor rate of 1.3 mean?
It means total repayable is 1.3 times the advance. A GBP 20,000 advance at 1.3 means GBP 26,000 total repayable.
What is a holdback percentage?
It is the percentage of card sales deducted toward repayment. A 10% holdback means GBP 10 from every GBP 100 of qualifying card sales goes to the provider.
Why can the APR-style estimate be high?
The fee is fixed and may be repaid quickly. Annualising that fixed cost over a short period can produce a high APR-style figure.
Is an MCA better than a business loan?
Not necessarily. Compare total repayable, cash-flow impact, speed, security, eligibility, and alternatives before deciding.
Does cash revenue count toward repayment?
Usually repayment is linked to card transaction sales, but agreements vary. Check what sales are included in the contract.
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