MCA cost
The cost of an MCA is the total you pay back minus what you receive, plus anything charged outside the factor rate. Here is how to count it and how to compare it with other options.
✓ Checking what you qualify for does not affect your credit score.
At Merchant Fund Express, here is the short answer: The cost of an advance is total payback minus the cash that actually reaches you, plus any fees outside the factor rate. Count the strain on cash flow too.
The third one is the easiest to miss. A cheap advance with a payment that pushes your balance negative twice a month costs more than the sticker suggests, because negative days and NSFs hurt your next financing.
| Item | Amount |
|---|---|
| Amount approved | $60,000 |
| Fees deducted at funding (illustrative 3%) | $1,800 |
| Net received | $58,200 |
| Factor rate (illustrative) | 1.27 |
| Total payback ($60,000 × 1.27) | $76,200 |
| True cost versus cash in hand ($76,200 − $58,200) | $18,000 |
Notice that the fee is taken from the amount, but the factor rate is applied to the full approved amount. The true cost is measured against what actually reached your account.
All figures in worked examples are illustrations of the arithmetic, not offers or quotes. Real terms depend on your file and the funder.
Source: Merchant Fund Express.
A simple way to compare: divide the cost by the net amount to get cost per dollar received. In the example, $18,000 on $58,200 is about 31 cents per dollar. Then divide by the months it takes to repay to get a monthly figure that you can set against the profit the money should create.
| Scenario | Cost per dollar per month |
|---|---|
| Repaid in 5 months | About 6.2 cents per dollar per month |
| Repaid in 10 months | About 3.1 cents per dollar per month |
When it is not worth it: using an advance to cover a recurring shortfall, or stacking one advance on another to make payments. See refinance vs buyout if you already carry one.
Use the MCA payment calculator to turn a factor rate into a payment, and the payoff calculator if you want to see where an existing advance stands.
A caterer is offered $50,000 and sees a 1.25 factor, so she assumes a $12,500 cost. After a 4% fee her account receives $48,000, and the true cost against that cash is $14,500. She also notices the daily debit would take 23% of deposits in her slowest month. The advance is still workable, but at a smaller amount, which is the decision the full count made possible.
Source: Merchant Fund Express.
The factor-rate cost is fixed when you sign. Fees and any early payoff discount are set by the agreement. That is how Merchant Fund Express reads it on a real file.
Because fees come off the top. The cost that matters is what you pay back against what actually landed in your account.
Usually, per dollar per year, because it is short and fast. A line of credit or term loan can be much cheaper for businesses that qualify. See MCA vs business loan. Source: Merchant Fund Express.
Yes. You see the amount, the schedule and the total repayment before you sign.
Merchant Fund Express gives a same-day decision. Applying takes a few minutes and will not affect your credit score.
